Contract notebook maker Wistron Corp (緯創) yesterday reported a 78.8 percent drop in net income in the first quarter of this year compared with the same period last year because of higher than expected operating expenses.
The falling profitability came as the company reported that its revenue had contracted by 20.5 percent over the same period to the lowest in five years because of falling notebook market share and slow product diversification.
Net income was NT$341.96 million (US$11.32 million) in the first three months of the year, or NT$0.15 earnings per share, the lowest since the first quarter of 2005 and far lagging behind the market consensus of NT$1.07 billion.
That compares with NT$1.61 billion in net income, or NT$0.7 per share, in the same period last year. Revenues were NT$125.82 million for the quarter, according to the company’s filing with the Taiwan Stock Exchange.
Operating expenses were NT$6.33 billion in the first quarter, or 5.03 percent of total revenue for the quarter, compared with the year-earlier level of NT$6.32 billion, or 3.99 percent of total sales.
Wistron is the world’s third-largest contract laptop maker after Quanta Computer Inc (廣達) and Compal Electronics Inc (仁寶).
In recent years, the company has gradually diversified into production of non-notebook products such as smartphones, LCD TVs, monitors and desktops, as well as data center gears to offset falling notebook business.
The company’s notebook shipments fell to 1.55 million units last month, down 14 percent month-on-month and 18 percent less year-on-year, following shipment declines of 21 percent quarter-on-quarter and 31 percent year-over-year to 4.5 million units in the first quarter.
The company has forecast notebook shipments will grow by between 5 percent and 10 percent this quarter from last quarter.
Gross margin improved to 5.21 percent last quarter from 5.09 percent a year earlier.
However, due to a falling economy of scale and higher operating costs, the company saw its operating margin plunge to 0.17 percent from 0.62 percent in the previous quarter and 1.1 percent a year earlier.
Analyst said the company’s operating margin outlook appears more skewed toward the downside in the coming quarters as it aims to increase its investment in new businesses, including smartphone.
"We believe the company has passed the initial stage of certification for its new smartphone business for a US customer," Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豐丰) said in a client note yesterday.
Chen said first quarter could be the bottom for Wistron’s quarterly earnings trend, but he has concerns about the growth potential for Wistron's new smartphone business.
"It seems that the model that Wistron is producing will not be a mainstream model going forward, and this is one of the key reasons for our lower forecasts," he said.
Yuanta has revised downward earnings forecasts for Wistron by 17.9 percent to NT$1.49 per share for this year and by 31.2 percent to NT$1.91 next year on weaker sales and operating margin assumptions.
On Tuesday, smaller contract laptop maker Inventec Corp (英業達) posted NT$1.89 billion in net profits in the first quarter, or NT$0.53 percent per share, up from NT$1.78 billion, or NT$0.50 per share, for the same period last year.
Revenue rose 15.8 percent annually to NT$116.68 billion for the quarter.
Inventec attributed the increase to higher contributions from its server, handheld device and solar energy product manufacturing units.
“Inventec is likely to benefit from PC replacement demand going forward, given its high exposure to commercial notebooks,” Yuanta analyst Calvin Wei (魏建發) said in a separate note yesterday.
In addition, the company’s handset shipments could reach 40 million to 45 million units this year, up from 30 million units last year, thanks to the contribution from Xiaomi Corp’s (小米) smartphone orders, Wei said.
Shares of Wistron rose 1.2 percent to NT$25.2 and those of Inventec advanced 3.04 percent to NT$27.10 in Taipei trading.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day