Fri, May 12, 2017 - Page 12 News List

Asustek expects tough quarter

NEW PRODUCTS:The company expects sales to pick up significantly next quarter, with the introduction of the latest ZenFone models and new notebook computers

By Lauly Li  /  Staff reporter

Asustek Computer Inc (華碩) yesterday said that second-quarter sales and earnings could drop to their lowest levels for this year due to product transition, rising component costs and a strong New Taiwan dollar.

“This is going to be a very tough quarter for Asustek, because of all the negative factors weighing on operations,” Asustek chief financial officer Nick Wu (吳長榮) told reporters after an investor conference in Taipei.

The company expects revenue from PC-related products, which contributed 66 percent to total brand sales of NT$98.2 billion (US$3.25 billion) last quarter, to drop by 5 to 10 percent quarter-on-quarter due to a seasonal slowdown, Wu said.

Smartphone and tablet sales are expected to plunge by 20 to 25 percent sequentially this quarter, while component sales are forecast to decline by 5 to 10 percent, Wu added.

Smartphones, which accounted for 20 percent of the firm’s total revenue last quarter, could post a loss this quarter before returning to profit next quarter, Asustek CEO Jerry Shen (沈振來) said.

“We plan to unveil the newest generation of ZenFone models in June or July, and begin shipping from the beginning of July. This will help lift the growth momentum of the smartphone business,” Shen said.

Asustek’s overall performance is expected to pick up significantly next quarter, as the company plans to introduce new gaming, thin-and-light, and two-in-one detachable notebooks, Shen said.

The prices of the new notebooks and smartphones will reflect the rising costs of components, such as DRAM and panels, which should improve Asustek’s operating margin next quarter, he said.

Asustek’s net income dropped 11 percent annually and 16 percent quarterly to NT$4.66 billion last quarter, marking its lowest quarterly result since the third quarter of 2011, company data showed.

Earnings per share were NT$4.9, compared with NT$6.6 a year earlier and NT$5.6 in the previous quarter.

The company’s operating margin dropped 0.4 percentage points annually to 3.9 percent in the first quarter and its gross margin fell 0.5 percentage points to 13.4 percent during the same period.

Shen attributed the earnings decline to component cost pressure and soft notebook demand.

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