Thu, Mar 27, 2014 - Page 14 News List

Wistron net profit dropped 37% last quarter

WISTFUL:The contract laptop maker posted NT$926m in net profit for last quarter, making its full-year profit the lowest in seven years, in part due to higher taxes

By Helen Ku  /  Staff reporter

Wistron Corp (緯創), the world’s third-largest contract laptop maker, on Tuesday said its net profit dropped 37 percent sequentially to NT$926 million (US$30.31 million) last quarter, missing analysts’ consensus estimate of NT$1.2 billion.

Last quarter’s figure brought its full-year profit to the lowest level in seven years at NT$5.75 billion, or earnings per share of NT$2.51, the company said in a filing to the Taiwan Stock Exchange.

The company made NT$7.26 billion profit in 2012, or NT$3.17 per share.

Wistron attributed the lower earnings to higher tax expenses.

“The tax rate for last quarter increased to 40 percent due to an additional income tax of NT$409 million, because the authorities reduced some of the company’s amortization expenses and rejected some of our investment credits,” public relations director Joyce Chou (周文玲) said by telephone.

“Although Wistron disagreed with the authorities’ assessment and had filed a request for re-examination, the company accrued potential losses [for last quarter] in a conservative manner,” she added.

In addition to assembling notebooks for brands including Lenovo Group (聯想), Hewlett-Packard Co and Dell Inc, Wistron also manufactures desktops for Acer Inc (宏碁), smartphones for BlackBerry Ltd and servers for IBM Corp.

NO LIGHT SEEN

“For 2014, we do not see any light at the end of the tunnel for Wistron,” Fubon Securities Investment Services Co (富邦投顧) analyst Arthur Liao (廖顯毅) said in a client note yesterday.

Liao said Wistron had been seeking new orders for non-notebook products, including Apple Inc’s iPhone 5C and 5S orders, as the PC industry is experiencing structural changes.

APPLE ORDER SHIFT

However, Apple may shift some iPhone 5C orders back to Pegatron Corp (和碩) next quarter at the earliest, after Wistron was found to have experienced production problems, Liao said.

BLACKBERRY SHIFT

Moreover, Liao said BlackBerry may shift its new smartphone orders to FIH Mobile Ltd (富智康) later this year, dealing another blow to Wistron’s sales during the second half of the year.

As the company’s handset revenue contribution could contract to between 13 percent and 14 percent of its total sales this year, from 19 percent last year, Wistron’s profit may remain weak this year, Liao said.

Liao added that the company’s full-year sales may decrease by 17 percent to NT$520 billion this year from last year, while net profit may decline 36 percent to NT$4.89 billion over the same period.

Meanwhile, the company’s board on Tuesday approved a plan to distribute a cash dividend of NT$1.8 and a stock dividend of 2 percent to shareholders this year.

With shares of Wistron ending at NT$24.8 yesterday, the payout proposal indicates a cash dividend yield of 7.25 percent, higher than average deposit rates offered by major banks in Taiwan of between 1.31 percent and 1.46 percent for one-year to three-year fixed savings.

The board also approved proposals to distribute employees bonuses of up to NT$618 million in the form of stock this year and to issue unsecured corporate bonds for an amount not exceeding NT$6 billion to fund future business expansion.

The company said that its dividend payout and other business proposals are to be voted on at its annual shareholders’ meeting on June 11.

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