Asustek Computer Inc (華碩), the world’s fourth-largest PC vendor, yesterday posted its smallest quarterly net profit for the past year after its tablet business drifted into losses due to gloomy demand.
Net profit dropped 8 percent to NT$4.16 billion (US$127.89 million) during the quarter ending March 31, compared with NT$4.54 billion in the previous quarter.
However, on an annual basis, net income climbed 13 percent from NT$3.68 billion.
As the slump in demand for tablets is expected to continue, Asustek forecast that its second-quarter revenue would contract by between 9 and 14 percent to between NT$95 billion and NT$100 billion, compared with last quarter’s NT$110.5 billion.
On an annual basis, Asustek still has a chance to hold its revenue steady in the second quarter.
The company made NT$99.37 billion in revenue in the same period last year.
“The [quarterly] downward pressure comes primarily from the tablet business, which is expected to drop by 30 percent or 40 percent annually by revenue,” chief financial executive Nick Wu (吳長榮) told an investors’ conference.
Wu expects a significant improvement in the company’s tablet business next quarter in terms of revenue and profitability, helped by new product launches.
The PC business, which accounted for 66 percent of the company’s revenue last quarter, is expected to be flat, or grow about 5 percent year-on-year in the current quarter, Asustek said.
“The company could still outpace the industry due to an improvement in average selling prices from rising contribution from gaming PCs and high-end ultra-thin notebook computers,” Wu said.
To fend off intensifying competition in the PC industry and explore a new growth engine, Asustek said it has tapped into new product areas such as virtual reality (VR) headsets, augmented reality (AR), robotics, as well as Internet of things (IoT) for smart homes, cars and wearables.
“Those non-PC products will gradually become the main growth drivers for the company,” Wu said.
The first VR headsets for mobile phones are due to hit the market next quarter, while VR headsets for PCs and AR headsets for mobile phones are to arrive at next year’s Consumer Electronics Show (CES) in Las Vegas, based on the firm’s timetable.
For the Computex Taipei trade show, which is to run from May 31 to June 4, Asustek plans to showcase its first service robotics, as well as new mobile phones, tablets and PCs before they hit store shelves in July.
Commenting on the appointment of Asustek’s cofounder Ted Hsu (徐世昌) as chief strategy officer, chief executive officer Jerry Shen (沈振來) said that Hsu would help the company speed up formation of new and accurate strategies.
However, Shen avoided an investor’s question about whether Hsu is to succeed Jonney Shih (施崇棠) as chairman in the foreseeable future.
Asustek expects gross margin this quarter to range from 12.5 to 13.1 percent, compared with 13.5 percent last quarter, Wu said.
Operating profit margin is likely to range between 4 and 4.5 percent, compared with 4.3 percent in the previous quarter, he added.
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