Contract notebook computer makers have become cautious about shipments for the first quarter of this year, a traditional slow season for the business, market sources said on Saturday.
The sources said that since the Christmas shopping season has ended, it will be hard for the high level of consumption seen in the fourth quarter last year to continue into the first quarter of this year, which will likely depress demand for the next three months.
Shipments of the nation’s four major contract notebook makers — Quanta Computer Inc (廣達), Compal Electronics Inc (仁寶), Wistron Corp (緯創) and Inventec Corp (英業達) — are expected to suffer a month-on-month decline of between 8 percent and 10 percent due to lackluster sales of products running Microsoft Corp’s Windows 8 system, the sources said.
They added that the decline is expected to continue for the entire first quarter, with Morgan Stanley also forecasting that notebook shipments from the top manufacturers are likely to register a double-digit decline in the first quarter.
Quanta, the world’s largest notebook original design manufacturers (ODM) service provider, said the reduced number of working days in the first quarter resulting from the Feb. 9 to Feb. 17 Lunar New Year holiday is expected to lower production for the quarter.
Quanta said the side effects of the slow season are expected to drag down shipments by no less than 10 percent compared with the fourth quarter. The firm added that consumers might postpone purchases to wait for models equipped with Intel Corp chips, which would further dampen sales.
Quanta saw its shipments decline by 17 percent month-on-month last month despite the Christmas shopping season.
Wistron said that while the launch of new models has seen demand for its handheld devices rise, demand for other products in its portfolio is slowing down.
The company also anticipated that notebook shipments for the first quarter would fall by at least 10 percent from the previous quarter.
However, Pegatron Corp (和碩) said it remained optimistic about its sales for the first quarter, as the company has shifted its resources to the production of non-notebook items.
Morgan Stanley predicted that first-quarter notebook shipments from Quanta, Compal, Wistron, Inventec and Pegatron would drop by 11 percent compared with the fourth quarter to 35.5 million units.
This will touch the low end of the industry’s seasonal decline of 8 percent to 11 percent since 2010, the US brokerage said in a note to clients on Thursday.
“We retain an ‘overweight’ rating on Pegatron shares in view of near-term catalysts and would buy Quanta on share price weakness since we see cloud-computing’s potential as underappreciated,” Morgan Stanley analyst Grace Chen (陳星嘉) wrote in the note.
Chen said that the top five contract notebook makers shipped 12.55 million units last month, 1 percent more than Morgan Stanley had forecast earlier.
This indicated a stabilization of global notebook shipments, which will help notebook makers’ share prices in the near term, she said.
Bank of America Merrill Lynch expected shipments for the top five notebook contract makers to decline by 10 percent during the first quarter of this year because shipments in the fourth quarter of last year met the bank’s forecast of 3 percent quarterly growth.
“We view 2013 as a transition year for notebook ODMs as they seek growth opportunities outside PCs, and the latecomers in the tablet market face increasing pressure,” Merrill Lynch analyst Robert Cheng (鄭勝榮) wrote in a report on Thursday.
Regarding stock picks, Cheng recommended electronics manufacturing service providers, such as Hon Hai Precision Industry Co (鴻海) and Pegatron, given the improvement in their margins, and increased smartphone and tablet shipments.