Thu, Mar 21, 2019 - Page 12 News List

Asustek posts its first quarterly loss in nine years

‘FULL OF POTENTIAL’:The company in December last year unveiled a plan to shift its focus to gaming phones and expects to turn around its phone business in three years

By Lisa Wang  /  Staff Reporter

Asustek Computer Inc (華碩) yesterday reported its first quarterly loss in nine years, due mainly to its struggling mobile phone business and a shortage of Intel Corp chips for PCs.

Asustek said that it incurred a loss of NT$2.82 billion (US$91.46 million) in the fourth quarter of last year, when it booked a NT$6 billion one-time write-off from the mobile phone business.

Last quarter’s losses drove down the company’s full-year net profit to NT$4.24 billion, plunging 73 percent from NT$15.55 billion in 2017.

Earnings per share dipped from NT$20.9 to NT$5.7.

Operating profit margin fell from 3.2 percent in 2017 to 0.8 percent, the company said in a financial statement.

The company’s board of directors has approved the distribution of a cash dividend of NT$15 per common share.

The company in December last year unveiled a turnaround plan, shifting its focus to gaming phones and smartphones with higher-end cameras, rather than targeting the mass market.

“We believe that gaming phones will make up a certain portion of the overall mobile phone market. It is a segment full of potential. We are working with the gaming ecosystem to expand the market,” Asustek co-CEO S.Y. Hsu (許先越) told an investors’ conference yesterday.

The company aims to turn around the mobile phone business in three years, he said.

Asustek plans to launch its second-generation Republic of Gamers smartphone this year after the first model received positive feedback, Hsu said.

The company would continue to release a new model of its staple Zenphone series every year, he said.

“The first and second quarters will be a tough period, as the company is undergoing a period of transition,” chief financial officer Nick Wu (吳長榮) said.

“We hope the firm’s operations will return to the right track in the second half” of this year, he said.

A US-China trade spat is curbing demand for consumer electronics in emerging countries, due to volatile foreign-exchange rates, Wu said.

Those markets are Asustek’s target markets, he added.

The company’s PC business would continue to be depressed by a shortage of Intel chips through the first half, but the situation is expected to be alleviate in the third quarter, Hsu said.

Asustek said that it has increased its chip supply from Advanced Micro Devices Inc by a low single-digit percentage to reduce the effects of the shortage.

A slump in cryptocurrency mining activity has caused Asustek’s graphic cards inventory to spike, Wu said.

The inventory correction would negatively affect the company’s operations in the first half, he said.

The company expects PC shipments this quarter to slide 5 to 10 percent from last quarter, while component shipments — mainly motherboards — might drop at a quarterly rate of 5 percent.

Talking about the company’s PC strategy, co-CEO Samson Hu (胡書賓) said that it would boost the share of ultra-slim models to more than 40 percent, from 30 percent last year.

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