Thu, Aug 15, 2013 - Page 13 News List

Quanta’s profit falls on slow demand

LOW VISIBILITY:The world’s largest notebook maker said it expects shipments to increase sequentially this quarter as the computer industry enters its peak season

By Helen Ku  /  Staff reporter

Quanta Computer Inc (廣達), the world’s top contract notebook maker, yesterday said its second-quarter net profit fell 32.9 percent year-on-year and 9.7 percent quarter-on-quarter because of reduced orders.

The company posted the biggest decline in net profit last quarter among the nation’s PC original design manufacturers.

Quanta counts Apple Inc, Hewlett-Packard Co and Dell Inc among its major clients for notebook computers. Continued weakening demand for notebooks worldwide weighed heavily on the company, since notebooks account for about 65 percent of its total shipments in the second quarter.

Quanta vice chairman C.C. Leung (梁次震) said he expects notebook shipments to rise sequentially this quarter, which is a peak season for PCs. However, he declined to provide figures, citing limited industry visibility.

“As clients’ orders for laptops decreased significantly earlier this year, we expect sales in the second half of the year to increase from the first half, but by a finite amount,” Leung told investors in a conference call.

For this year, the company expects its annual notebook shipments would drop 18.21 percent to 44 million units from 53.8 million units last year, Quanta chief financial officer Elton Yang (楊俊烈) said in a conference call. In May, the company said it aimed to ship 50 million notebooks this year.

In the second quarter, non-notebook products, including tablet computers and servers, accounted for 35 percent of the company’s total shipments.

On the back of the strong demand for handheld devices, Quanta forecast that tablet and server shipments, which contributed 15 percent of its total sales last quarter, would continue to increase during the third and fourth quarters.

The company retained its target of shipping 20 million tablets this year.

During the April-to-June period, Quanta generated a net profit of NT$4.02 billion (US$134.16 million), compared with NT$5.99 billion during the same period last year and NT$4.45 billion in the first quarter, company data showed.

Earnings per share were NT$1.05 last quarter, down from NT$1.16 in the previous quarter and NT$1.56 a year ago.

Cumulative net profit during the first six months declined 23.8 percent to NT$8.47 billion from NT$11.12 billion during the same period last year.

Operating margin improved to 1.45 percent last quarter from 1.3 percent the previous quarter, which Leung attributed to the company’s product diversification, reallocation of resources and better cost control.

In order to trim manufacturing cost, Quanta this year transferred some of its orders to its manufacturing plant in Chongqing in China’s Sichuan Province, where the average monthly wage of 1,200 yuan (about US$200) is 14.28 percent lower than Shanghai’s 1,400 yuan, Yang said.

The Chongqing plant produced about 50 percent of Quanta’s laptop shipments last quarter, and the figure is expected to increase to 70 percent during the second half of the year, he added.

Quanta’s shares closed up 0.16 percent at NT$63.80 yesterday, outperforming the benchmark TAIEX, which fell 0.44 percent.

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