Fri, Aug 11, 2017 - Page 12 News List

Compal forecasts large jump in shipments

By Crystal Hsu  /  Staff reporter

Compal Electronics Inc (仁寶), the world’s second-largest contract laptop maker, expects shipments to grow by a double-digit percentage this quarter as it emerges from a write-down of NT$2.9 billion (US$95.68 million) related to China’s Leshi Internet Information and Technology Crop (LeEco, 樂視).

Compal, LeEco’s largest smartphone assembler, last quarter decided to write down all remaining account receivables related to its struggling Chinese client and terminated cooperation last month, Compal president Ray Chen (陳瑞聰) told investors at an earnings conference in Taipei.

“There will be no more losses related to LeEco and we have a conservative view on debt recovery,” Chen said, adding that Compal is weighing legal options against the Chinese firm.

The final write-off last quarter sank Compal’s net profit to NT$417 million, an 80 percent slump from a year earlier and a 62 percent retreat from the previous quarter, which translated into earnings per share of NT$0.06, company data showed.

Compal wrote down NT$1.38 billion in the two prior quarters.

The smartphone assembly business last year contributed 10 percent of the firm’s total revenue, Compal financial official Tina Chang (張妍婷) said, adding that the contribution might drop to 5 percent this year.

Operating margin last quarter stood at 0.4 percent, narrowing from 1.6 percent in the prior quarter and 1.4 percent a year earlier, a company financial statement showed.

Compal expects an increase of between 5 percent and 10 percent for PC shipments in the current quarter and a greater than 10 percent pickup for “smart” devices, including smartphones, wearables and Internet of Things gadgets, Chen said.

The company might return to its normal earnings performance in the second half of this year, he said, while guiding its full-year sales split to be 45-55 for the first and second halves of this year.

Major technology brands are scheduled to launch their next-generation devices this month and next to take advantage of back-to-school demand and sales in upcoming holidays.

“We see better demand this quarter and the momentum is likely to hold steady next quarter based on current visibility,” Chen said.

He provided a flattish business outlook for notebook computers, with a negative bias if component supply proves an issue.

PCs accounted for 69 percent of shipments in the second quarter, with commercial and consumer devices making equal contributions, he said.

However, smart devices are gaining strength in terms of revenue contribution, which is expected to surpass 35 percent next year and approach 50 percent between 2019 and 2020, Chen said.

Demand for tablets, wearables and Internet of Things devices is expected to continue to pick up, although the market for smartphones has grown increasingly competitive and saturated, he added.

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