Sat, May 12, 2018 - Page 12 News List

Asustek predicts smartphone boost

By Ted Chen  /  Staff reporter

Asustek chief executive officer Jerry Shen, right, discusses the company’s financial results for the first quarter and its prospects for the second quarter during a news conference at the company’s headquarters in Taipei yesterday.

Photo: CNA

Asustek Computer Inc (華碩) expects to see rising smartphone sales next quarter as the company overcomes supply chain constraints.

The sales contribution from the company’s mobile business unit is expected to grow by up to 30 percent sequentially this quarter following the launch of new and revised models, Asustek chief executive officer Jerry Shen (沈振來) told an investors’ conference in Taipei.

New models such as the ZenFone Max Pro received a much-warmer-than-expected reception in emerging markets such as India and Indonesia, Shen said, noting that demand has outpaced the company’s production capacity.

While the shortage of passive modules and camera sensors would continue to limit smartphone shipments and result in a shortage this quarter, constraints are likely to be resolved in the beginning of next quarter as the inventory ramp-up period winds down, Shen said, adding that the company expects accelerated mobile sales growth in the second half of this year.

Market demand has far exceeded expectations, leaving the company unable to fill orders, but Shen said that he is confident that Asustek would be among the few brands to fare well in the increasingly tough smartphone market.

The company reported that net income in the first quarter dipped 35 percent annually and 41 percent quarterly to NT$2.38 billion (US$79.94 million) as the slow season crimped demand for PCs, motherboards, graphics cards and other components. Earnings per share were NT$3.2.

Earnings during the period were also dented by the provisioning of 65 million euros as the company braces for anticipated fines from the European Commission, which launched an investigation into improper maintenance of retail prices in February last year.

Due to the provision, the company posted NT$2.09 billion under its non-operating items on its latest audited statements, and recorded a foreign-exchange gain of NT$1.17 billion.

Net revenue during the past quarter dipped 8 percent annually and 13 percent sequentially to NT$90.06 billion.

Gross margin inched up from 13.7 percent the previous quarter to 14 percent, with operating margin rising from 3.8 percent to 4.5 percent, helped by the company’s organizational restructuring efforts, Asustek chief financial officer Nick Wu (吳長榮) said.

PC and component sales this quarter could continue to dip as much as 12.5 percent and 25 percent respectively, Wu said.

Blockchain mining has been a highly unpredictable factor affecting sales of graphics cards and related components, which could drop further this quarter following a recent downturn in the digital asset’s value, he said.

“It’s nice to get a boost from mining, but we do not give it a significant weighting in our modeling,” Wu said.

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