Sat, Aug 12, 2017 - Page 12 News List

Asustek income hit by weak demand

‘DISPLEASED’:The firm faced intensified competition in European and US markets in the beginning of the year, but was slow to react, chief executive officer Jerry Shen said

By Lauly Li  /  Staff reporter

Asustek Computer Inc’s (華碩) net income last quarter plunged more than 50 percent annually to NT$2.01 billion (US$66.2 million), the lowest in 26 quarters, on weak demand for PCs and smartphones.

“We are very displeased with the results. The company will do everything to recover the momentum as soon as possible,” Asustek chief executive officer Jerry Shen (沈振來) told an earnings conference in Taipei.

Gross margin dropped 1.8 percentage points annually to 11.6 percent, while operating margin fell 2 percentage points from a year earlier to 2 percent, Asustek data showed.

The company faced intensified competition in US and European PC markets in the beginning of this year, but acted “a little bit late” to adjust its strategy in those places, Shen said.

While the product life of ZenFone 3 series smartphones expired in the past few months, the delayed launch of the ZenFone 4 series has significantly weighed on the company’s smartphone business in the first half of this year, Shen said.

Shen said a restructuring plan, launched in May, would shorten the time between product design and launch.

The company has also reallocated some of its personnel within its computer business, placing more focus on gaming PCs, he said.

The restructuring plan would bear fruit in three to four quarters, Asustek chief financial officer Nick Wu (吳長榮) said.

“We expect growth momentum in revenue and profitability to recover in the second quarter of next year at the earliest,” Wu said.

For this quarter, Asustek forecast PC shipments, which includes desktop and notebook computers, to climb by between 10 and 20 percent from a quarter earlier, Wu said.

Components shipments are expected to increase by between 5 and 10 percent this quarter, and mobile products shipments would jump between 20 and 30 percent quarter-on-quarter on the back of the launch of the ZenFone 4 series, Wu added.

Asustek is to host a launch event for ZenFone 4 devices in Taipei on Thursday next week.

South Korean actor Gong Yoo, who is the product’s spokesperson, is also to attend the event.

The company counts on Gong’s popularity to drive sales, Shen said.

Shen declined to disclose the amount paid to Gong for his endorsement of the handset.

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