Quanta Computer 3Q profit rises with orders

Quanta Computer Inc (廣達電腦), Taiwan's largest notebook computer maker, said third-quarter profit rose 41 percent as customers such as Dell Computer Corp placed more orders.

Net income rose to NT$2.87 billion (US$83.2 million) from NT$2.03 billion in the year-ago period.

Taiwan manufacturers of computers for other companies are expected to benefit as declining sales for personal computers worldwide forces companies such Dell, which accounts for about half of Quanta's sales, and Hewlett-Packard Co to farm out more of their production to cut costs.

"Major computer companies like Dell are increasingly counting on outsourcing to Taiwan to lower production costs, and Quanta is one of the main beneficiaries," said Teresa Chen, an analyst at Deutsche Bank Securities in Taiwan.

Quanta shares fell NT$1, or 1.4 percent, to NT$73 before the announcement. The stock has risen 9 percent this year, compared with a 17 percent drop in the nation's TWSE Index.

Quanta's third-quarter profit fell compared with the previous quarter's profit of NT$3.7 billion as foreign exchange gains faltered, and terrorist attacks in the US hastened a slowdown in computer demand and disrupted exports.

The terrorist attacks temporarily halted air services in the US and forced most airlines to cancel flights and tighten security checks, creating a bottleneck for exporters like Quanta.

Quanta minimized the disruptions by chartering a cargo plane to deliver notebook computers to Austin-based Dell, company officials said. Dell, which became the biggest PC maker this year by attracting customers with lower prices, helped boost Quanta's sales in the first nine months by 38 percent to NT$83 billion.

The Taiwan dollar's 5 percent decline against the US currency in the second quarter inflated the value of Quanta's dollar-denominated deposits by at least NT$800 million, Chief Financial Officer Tim Li (李杜榮) said.

The weakness of the local currency was stemmed in the third quarter after the central bank cut key interest rates to prevent the economy from sliding into a recession.

Quanta must contend with competitors that are building plants in China, where production costs are lower.

Compal Electronics Inc (仁寶電腦), the second-largest supplier of Dell notebooks in Taiwan, said last week it expects shipments to rise by a third next year as it lowers prices to win orders from Dell and other clients.

Compal plans to ship 1.5 million notebooks to Dell in 2002, more than double this year's 600,000, a local Chinese-language newspaper said last week, citing company President Gary Chen (陳瑞聰).

Rival Acer Inc (宏電) also offered to sell notebook PCs to Dell at prices lower than Quanta's. The largest PC company hasn't yet shifted orders to Acer because of concerns about design and quality, Quanta's Li said.

Quanta last year started to shift notebook assembly and production of components to China, making the company the last major Taiwan computer maker to tap China's labor pool and potential market.