Wistron’s Q3 net profit tumbles to hit five-year low

By Helen Ku  /  Staff reporter

Sat, Nov 16, 2013 - Page 14

Wistron Corp (緯創), the world’s third-largest laptop contract maker, on Wednesday reported that its third-quarter net profit had dropped 15.49 percent quarter-on-quarter and 3.73 percent year-on-year to a five-year low of NT$1.47 billion (US$49.7 million).

Earnings per share during the third quarter of the year were NT$0.64, down 15.79 percent from NT$0.76 in the previous quarter and 4.48 percent from NT$0.67 a year ago.

Wistron chief financial officer Henry Lin (林進財) told analysts in a conference call that the company’s annual laptop shipments were estimated to be in the range of 23 million and 24 million units.

Due to weakening demand for traditional PCs amid the rise of mobile devices, total laptop shipments for next year was forecast to fall to 20 million units, he added.

Boosted by new orders, smartphone and tablet shipments were forecast to grow 17.85 percent to 33 million units next year from 28 million units this year, Lin said.

“We are all set,” Lin said, when asked if the to-be-completed new orders were Apple Inc’s iPhone 5C product.

Wistron manufactures tablets and smarpthones for clients including Lenovo Group Ltd (聯想), Acer Inc (宏碁) and Asustek Computer Inc (華碩).

Recent industry speculation suggests that Apple may pass some of its orders to more original design manufacturers (ODM) other than Hon Hai Precision Industry Co (鴻海精密) and Pegatron Corp (和碩) to diversify its supply chain and reduce production risks.

Lin declined to confirm whether Wistron has been selected as Apple’s new industry partner, saying that the company is “ready to take orders from new clients at full capacity.”

Due to decreased orders of lower-margin laptops, Wistron’s gross margin last quarter improved to 5.05 percent from 4.15 percent during the previous quarter and 4.89 percent a year ago, Lin said.

For this quarter, Wistron forecast its laptop shipments would fall by 17 percent to 5 million units from 6.05 million units last quarter.

TV shipments are estimated to drop by 5 to 10 percent quarter-on-quarter from 800,000 during last quarter, while LCD monitor shipments could grow to 2.5 million units this quarter from 2.45 million units last quarter, Lin said.

In a report released yesterday, Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豊丰) said he expects Wistron’s orders for smartphones to rise next year.

“We believe weakness on Blackberry orders can be offset by new customer Apple and increased orders for Asustek’s Padfone,” Chen said.

However, UBS analyst Patrick Chen (陳鈞寧) said Wistron’s short-term business may continue suffering from a loss in orders for laptops and an unclear outlook for its smartphone business.

“We expect Wistron’s near-term outlook to continue to be challenged, given share loss at Acer and Lenovo’s ODM orders, slower-than-expected ramp in data center servers and LCM assembly business, and a deteriorating outlook for smartphone customer BlackBerry,” Chen said.

Shares of Wistron closed down 0.59 percent at NT$25.1 yesterday.