Thu, May 05, 2011 - Page 11 News List

Pegatron expects profits to improve in second half of year

Staff Writer, with CNA

Electronics contract manufacturer Pegatron Corp (和碩) said yesterday it expected its performance to gradually improve in the coming months after it posted lower-than-expected profits in the first quarter.

“Our operations should improve quarter by quarter and things will get better between August and October this year as the outlook improves in the second half of the year,” Pegatron chairman Tung Tsu-hsien (童子賢) said on the sidelines of an event to promote family-friendly working environments.

The Taipei-based company on Wednesday last week reported first-quarter profit of NT$1.51 billion (US$39.9 million), down 35 percent from the previous quarter, and a record low gross margin of 1.8 percent.

It attributed the disappointing results to weak demand from new customers and higher labor and component costs.

Tung said the results also reflected uncertainty over Pegatron’s positioning since it was spun off from Asustek Computer Inc (華碩) in late 2009, with potential clients worried it would not be able to make a clean break from the world’s sixth-largest PC brand.

That has made it more difficult for Pegatron to vie for orders from other PC vendors, Tung said.

Tung hopes investors can give Pegatron more time because the company plans to launch a diverse lineup of products that will establish it as a broad-based manufacturer similar to US-based technology company 3M Co.

It expects to produce a range of goods from electronics and communications products to precision machinery, Tung said.

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