Asustek Computer Inc (華碩) yesterday said it expects revenue to fall by about 12 percent annually to NT$105 billion (US$3.34 billion) this quarter, dragged down by a likely decline in smartphone and tablet computer sales.
However, the estimate represents a 11.78 percent growth from the previous quarter’s NT$93.93 billion, the company said.
As production of the ZenFone 3 series is to begin in the middle of this month, contribution from the smartphone business will be limited to the remaining six weeks of this quarter, Asustek said.
“It will be challenging to maintain a break-even level for the smartphone business this quarter, given the shipping schedule and initial marketing expenses for the new handsets,” Asustek chief financial officer Nick Wu (吳長榮) told reporters after the company’s earnings conference.
Wu said revenue contribution from mobile devices, including smartphones, this quarter is expected to increase by between 10 and 15 percent from the previous quarter, but will likely fall by 20 percent from a year earlier.
Sales of PCs and computer components are forecast to increase by between 10 and 15 percent from a quarter ago, but are expected to remain flattish from a year ago, he said.
Chief executive officer Jerry Shen (沈振來) said smartphone sales would pick up steam next quarter, after new products hit all major markets this quarter.
Shen declined to comment whether Asustek could reach its handset shipments goal of 25 million units this year, but said the overall revenue from the smartphone segment this year might increase by a double-digit percentage from last year in light of the company’s efforts to tap into the high-end market.
“The rising average selling price of ZenFones is more important to us,” he said.
Last quarter, Asustek reported the lowest profit in the past five quarters, as PC demand was weak in a low season and smartphone prices fell amid a product transition. Net profit dropped 11 percent annually and 1 percent quarterly to NT$4.12 billion, with an earnings per share of NT$5.6.
Gross margin dropped by 0.9 percentage points from last year’s 14.3 percent to 13.4 percent last quarter, but increased slightly by 0.3 percentage points from the previous quarter’s 13.1 percent.
Operating margin contracted by 0.8 percentage points annually and 0.3 percentage points quarterly to 4 percent last quarter, the lowest level since the third quarter of 2013, according to the company’s filings with the Taiwan Stock Exchange.
In other developments, Asustek’s board yesterday approved the purchase of a NT$7.83 billion plot of land from Eastern Media International Corp (東森國際) to build a new office building and a research and development facility.
The 11,400 ping (37,686m2) plot is near Asustek’s headquarters in Taipei’s Beitou District (北投), Asustek said, adding that the sales will include Eastern Media’s lease contract with Costco Wholesale Co’s branch.
The transaction is expected to be closed this or next quarter, it said.
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