Mon, Jun 17, 2013 - Page 13 News List

Asustek expected to post 0.3 percent growth

By Camaron Kao  /  Staff reporter

Asustek Computer Inc (華碩電腦), the world’s No. 5 PC brand, is expected to report a lukewarm 0.3 percent annual increase in revenue this year as weaker-than-expected growth in notebook computer shipments eroded expansion in its tablet business, HSBC Securities forecast.

Asustek is set to hold an annual shareholders’ meeting today to announce its outlook.

Citing weaker growth momentum, HSBC on Thursday cut its forecast of Asustek’s revenue this year by 5.8 percent to NT$414.51 billion (US$13.9 billion) from a previous estimate of NT$440.06 billion, citing delays in launching new notebook computers and weak demand for new models.

DELAYS

Asustek delayed the rollouts of its new products equipped with Intel Haswell, Intel’s newest processor, to September as well as postponing the launch of tablets powered by Intel’s new Atom chips to October, HSBC said in the research note.

Asustek could lose its competitive edge because of the postponements, as it has lagged its competitors in selling new laptops, running Intel’s new chips, HSBC said.

“Asustek’s management cited a difficult product transition ahead of a new model launch in late third quarter of this year as sluggish demand is making its product transition particularly difficult this year,” HSBC said.

With low visibility on demand and a delay in the new model rollout, HSBC forecast Asustek’s notebook computer shipments to grow only by mid-single digits sequentially and to grow 15 percent quarter-on-quarter in the final quarter of this year.

Asustek is expected to ship as many as 4.5 million tablets next quarter, HSBC said.

The firm only shipped 3 million units in the second quarter, according to the note.

However, earnings contribution from the tablet business would be very limited, as Asustek’s margin for the tablet business remained close to break-even point, HSBC said.

HSBC downgraded the company’s shares from “overweight” to “neutral” and slashed its target price to NT$307 from NT$382.

CLSA

CLSA Asia Pacific Markets also cut its forecast for Asustek on Friday because it expects the company’s notebook sales to fall 10 percent quarter-on-quarter this quarter, underperforming the low single digit drop in the industry, as the market digests inventory in the US and Brazil.

“We believe Asustek overshipped to the USA and Brazil [last quarter, which accounted for] 18 percent of its total notebook units,” CLSA said.

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