Asustek Computer Inc (華碩) co-CEO S.Y. Hsu (許先越) yesterday said he is upbeat about the company’s outlook, as its new Asus ROG Phone II has received “better-than-expected” feedback from the gaming community.
The positive comment came despite the company’s mobile phone business incurring a loss of NT$1.09 billion (US$34.60 million) last quarter.
“We have received pre-orders for more than 2 million units,” Hsu told an investors’ conference in Taipei.
The ROG Phone II, developed in cooperation with Tencent Holdings Ltd (騰訊), partly owes its success to gaming features designed specifically by the Chinese Internet giant, he said.
“We are still in the early stages of the [gaming phone] market ... which we aim to expand and dominate,” Hsu said.
While Asustek is looking to expand its mobile business, it has not neglected its core PC business, with the company’s net profit excluding mobile phones edging up 1.2 percent on a quarterly basis to NT$2.77 billion last quarter, while operating margin improved from 2.1 percent to 3.1 percent.
“We are leading the Southeast Asian markets in terms of laptops and motherboards,” co-CEO Samson Hu (胡書賓) told investors, adding that the company holds an average 40 percent share of the gaming laptop market across the region.
The company reported 40 percent year-on-year growth in shipments of ultra-light consumer PCs for the first six months of this year, which contributed to 57 percent of overall sales in the period, Hu said.
Asustek is equally focused on promoting laptops designed for content creators and enterprise clients, Hu said, implying that new products from these categories would soon hit the markets.
Facing investors’ concerns over the US-China trade dispute, which caused the company’s revenue to drop 15 percent sequentially to NT$71.27 billion last quarter, Hu said the company has two to three months of stock in the US to handle an additional 10 percent US tariffs on Chinese goods.
“We expect this [dispute] to last even longer,” Hu said.
Asustek has negotiated with its suppliers to relocate production plants to avoid more tariffs, Hu said.
“This would inevitably generate higher production costs,” he said.
In the April-to-June quarter, net profit dropped 23 percent on a quarterly basis to NT$1.68 billion, which translates into earnings per share of NT$3.07.
Operating margin improved slightly from 1.1 percent to 1.4 percent on the back of lower component prices and product mix adjustments, but the figure remained low when compared with 3.5 percent in the same period last year.
“We are aiming to raise our operating margin to 3 percent this quarter,” Asustek chief financial officer Nick Wu (吳長榮) said.
The company’s board of directors pledged to distribute cash dividends of at least NT$10 per share over the next three years to restore investors’ confidence in the company.
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