Fri, Oct 24, 2008 - Page 12 News List

Simplo sees clouds in notebook forecast

POWERING DOWN The laptop battery maker said its pre-tax profits are likely to fall in the fourth quarter, despite a continuing industry-wide shortage of power cells

By Elizabeth Tchii  /  STAFF REPORTER

Simplo Technology Co (新普科技), the world’s largest laptop battery maker, said yesterday the outlook for the notebook computer business was cloudy because of the impact of the global credit crisis on consumer and corporate spending.

Despite a projected sharp retraction, “whatever notebook growth is projected, we will do better,” Raymond Sung (宋福祥), Simplo’s chairman and CEO, told an investors conference.

The Hsinchu-based company projects a revenue of between NT$8.65 billion to NT$8.85 billion (US$259.8 million to US$265.8 million) in the fourth quarter, up slightly from NT$8.44 billion in the third quarter.

Gross profit is likely to reach NT$1.29 billion to NT$1.33 billion in the fourth quarter, compared with NT$1.32 billion in the third quarter, while operating profit may be around NT$728 million to NT$738 million in the fourth quarter, not much changed from NT$720 million in the third, the company said.

Pre-tax profits, however, are expected to drop to between NT$826 million and NT$855 million in the fourth quarter, from NT$928 million in the third quarter, which translates into earnings per share (EPS) before tax of NT$3.96 to NT$4.1 in the fourth quarter, compared with NT$4.45 in the third quarter.

EPS after tax may reach NT$3.01 to NT$3.12 in the fourth quarter, down from NT$3.30 in the third, said Jackie Ting (丁惠敏), Simplo’s chief financial officer.

Despite power cell shortage earlier which is predicted to last until the first quarter of next year, Sung still believes industry suppliers will keep a lean inventory of about 10 percent to 15 percent above orders for next year in order to prevent excess inventory and resulting price reductions.

In terms of product mix and entry into new businesses, Sung remains conservative and believes most revenue will come from notebook battery sales.

“Outside of notebooks, other products are difficult to do. Maybe batteries for electric-powered bicycles might be an option, but there has to be a concerted effort for a large group of people to embrace this new form of transportation for us to make a profit,” Sung said.

In the year to last month, the company saw pre-tax profit grow 31 percent to NT$2.33 billion from a year earlier on revenue of NT$21.98 billion, up 40 percent over the same period.

Net profit in the first three quarters totaled NT$1.7 billion, up 27.5 percent year-on-year, with an EPS of NT$8.17, up from NT$6.81 a year earlier.

Many industry analysts attributed the netbook (or mini-notebooks) boom to Simplo’s performance this year, but Sung said the contribution to shipments from netbooks was only around 8 percent.

He forecast netbooks would make up 10 percent to 15 percent of total shipments next year.

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