Quanta Computer Inc (廣達) yesterday said cloud-computing business might drive the its sales growth this quarter, offsetting a weakness in notebook computer manufacturing.
“Due to the global economic downturn and China’s weak economy, the outlook for notebook industry this quarter is weaker than before,” vice chairman C.C. Leung (梁次震) told a news conference at the company’s headquarters in New Taipei City’s Linkou District (林口).
However, growth momentum in the company’s server and wearable device businesses should remain strong this quarter, Leung said.
Notebooks contributed 55 percent to 60 percent of the company’s NT$275.89 billion (US$8.4 billion) revenue last quarter, while the cloud-computing segment, which includes assembling Apple Inc’s smartwatches, accounted for 25 percent of revenue, Quanta said.
Chief financial officer Elton Yang (楊俊烈) said the firm’s cloud-computing segment might contribute as much as 30 percent of total revenue this year.
“The company’s wearable device business enjoyed a big growth spurt this year, and we expect the momentum to extend to next year,” Leung said.
Leung declined to provide forecasts for shipments and sales from the wearable device business this quarter, as well as any revenue guidance for the current quarter.
Capital Investment Management Co (群益投顧) on Oct 8 said Quanta might see revenue this quarter fall 1.95 percent from a year ago and 10.56 percent quarter-on-quarter to NT$246.73 billion.
Leung did not deny reports that Quanta is working with a client on a next-generation smartwatch.
A company source said that Quanta is to invest NT$1.5 billion next month to expand production capacity for a new Apple Watch model.
Leung said the notebook industry next year is likely to be flattish or decline from this year.
However, Quanta chairman Barry Lam (林百里) is still optimistic about the firm’s outlook for next year, citing signs of strong demand for wearable devices and cloud-computing products.
“The outlook for Quanta’s new products also seems positive,” Lam said. “We should have good opportunities next year.”
Quanta’s net income last quarter surged 23.2 percent annually and 72.8 percent quarterly to NT$5.83 billion, mainly because of better-than-expected notebook shipments and foreign exchange gains of NT$2.3 billion.
Earnings per share were NT$1.51 last quarter, compared with NT$1.23 per share last year and NT$0.88 in the second quarter.
Quanta shipped 11.6 million notebooks last quarter, up 8.4 percent quarterly and exceeding its estimate of 5 percent growth.
Commenting on Quanta's latest financial results and product shipments, Daiwa Capital Markets said the firm's sales mix continues to shift towards more non-PC business, but its progress appears slower than expected as the company was struggling between higher notebook prices for Macbooks and slower sales growth from the Apple Watch.
However, the company's solid growth in cloud server business remains a "bright spot," Daiwa analysts Steven Tseng (曾緒良) and Jack Lin said yesterday.
"As the company now expands its client coverage from public cloud giants (eg. Amazon, Microsoft, etc.) to emerging Internet companies (eg. Uber, Dropbox, etc) as well as large enterprises. We hence remain positive on the steady improvement on Quanta’s sales mix and profit margin trend," Tseng and Lin wrote in a client note.
This story has been updated since it was first published.
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