Thu, Nov 01, 2012 - Page 13 News List

Non-notebook products boost Quanta’s profits

By Helen Ku and Lisa Wang  /  Staff reporters

Quanta Computer Inc (廣達), the world’s largest contract notebook maker by revenue, yesterday reported an increase in third-quarter earnings, as rising sales of non-notebook products offset declining notebook shipments.

The company said it now expects sales of non-notebook products to achieve 30 percent growth this year from last year.

“We forecast that non-notebook product shipments will reach a peak this quarter, following the recent launch of new Windows 8-powered tablets and smartphones,” Quanta vice president and CFO Elton Yang (楊俊烈) said at an investors’ conference at the company’s Taoyuan headquarters.

The company shipped 13.4 million notebooks in the third quarter, down 3.6 percent from 13.9 million units in the second quarter.

Quanta chairman Barry Lam (林百里) said it is too early to conclude that tablets have replaced notebook computers, adding that the company’s notebook shipments would continue to increase this quarter and next year.

In the third quarter, Quanta reported a net income of NT$6.47 billion (US$221.5 million), an increase of 8.1 percent from NT$5.99 billion in the second quarter and up 18.9 percent from NT$5.45 billion a year ago. Earnings per share were NT$1.69 last quarter, compared with NT$1.56 in the previous quarter and NT$1.42 a year ago.

Gross and operating margin last quarter were 3.95 percent and 1.74 percent respectively, compared with 3.79 percent and 1.15 percent in the preceding quarter and 3.65 percent and 1.12 percent a year ago.

To enhance its profitability, Quanta has been adjusting its product mix and developing high-margin products. Lam said the company is expecting to receive more orders for cloud-computing servers from enterprises in the fourth quarter and next year.

However, Horizon Securities (宏遠證券) analyst Cheng Kai-ming (鄭開明) said he retains a downbeat attitude toward Quanta.

“Hon Hai Precision Industry Co’s (鴻海) scale might pressure to Quanta and take away some of its orders. Quanta needs to expand its business to catch up with other manufacturers,” he said.

Meanwhile, the weak macroeconomy has curbed consumer demand for notebooks, causing Compal Electronics Inc (仁寶電腦), the world’s No. 2 contract notebook maker, to report a nearly 20 percent annual decline in net income for last quarter at NT$1.74 billion. On a quarterly basis, the figure represented a 3.3 percent decline.

For this quarter, notebook shipments are expected to grow by low single digits from last quarter’s 9.67 million units, Compal spokesman Chang Chih-ming (張志銘) said yesterday by telephone. The forecast was lower than a 20-percent sequential growth Compal president Ray Chen's (陳瑞聰) estimated in September.

Compal expects notebook shipments to approach 40 million units for the whole of this year, down slightly from 40.5 million units last year. The company predicts a high single digit percent growth for next year’s shipment.

Compal, however, has a high hope for its tablet business next year. Tablet shipment is expected to soar to between 6 million and 8 million units next year, compared with 2 million units this year, helped by new customers and new Windows 8-powered models, according to Chen.

The company will also manage to keep its gross margin flat this quarter from last quarter’s 4.3 percent, Chen said.

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