Tue, May 01, 2012 - Page 12 News List

Compal Electronics’ profits decline 47% in first quarter

Bloomberg

Compal Electronics Inc (仁寶電腦), the world’s second-largest contract maker of notebooks, posted its seventh consecutive decline in profit, missing estimates, as demand for computers slows globally.

First-quarter net income dropped 47 percent to NT$1.87 billion (US$63 million) from NT$3.5 billion a year earlier, the Taipei-based company said in a statement. The average of 10 analysts estimates compiled by Bloomberg was for a profit of NT$2.28 billion.

Competition from Apple Inc’s iPad and more-powerful smartphones have prompted consumers to spend less on computers, resulting in global shipment growth slowing to 0.5 percent last year from the 14 percent pace over the previous 12-month period.

New models, including high-end Ultrabooks, and a new processor from Intel Corp could help revenue climb this quarter.

Consolidated revenue fell 5.7 percent from a year earlier to NT$161.3 billion. However, that figure is forecast to rise to NT$183.4 billion this quarter, with net income of NT$3.1 billion, according to estimates -compiled by Bloomberg.

Compal shares rose 1.5 percent to close at NT$33.60 yesterday on the Taiwan Stock Exchange before the announcement. The stock has climbed 11 percent this year, compared with a 6.1 percent advance in the TAIEX.

Compal and its stronger rival, Quanta Computer Inc (廣達電腦), have decided they need to diversify into cloud computing devices like tablets and servers if they want to survive and grow.

“The reign of the personal computer as the sole corporate access device is coming to a close,” Gartner said on March 12. “By 2014, the personal cloud will replace the personal computer at the center of users’ digital lives.”

Compal boosted revenue from non-notebook devices such as tablets, all-in-one PCs, televisions and smartphones, to 16 percent of sales last year from 7 percent the year before, said Jimmy Chen, an analyst with Masterlink Securities Corp (元富證券).

That figure may climb to about 20 percent this year, though the company’s decision not to manufacture servers makes Compal less diversified than Quanta and more at risk from a slowdown in the notebook industry, Chen said on April 24.

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