Notebook computer maker Wistron Corp (緯創) reported a 90 percent year-on-year growth in profit in the first quarter, thanks to strong growth in laptop shipments and its diversification into non-notebook products.
Profits last quarter reached NT$2.7 billion (US$81.8 million), or earnings per share of NT$1.45, the company said in a statement yesterday.
Sales jumped 27.4 percent from a year earlier to NT$143.4 billion, while gross margin rose to 5.27 percent from 4.95 percent.
“We believe there will be no surprises in the second quarter,” chief financial officer Henry Lin (林進財) told an investor conference call, adding that business performance for the year should also be in line with the company’s expectations.
Notebook shipments in the current quarter are expected to rise by 5 to 10 percent sequentially, while non-notebook products — such as LED TV, all-in-one PCs, monitors and handheld devices — would see “higher percentage growth,” he said
Like other contract notebook makers such as Quanta Computer Inc (廣達電腦) and Compal Electronics Inc (仁寶電腦), Wistron is also facing the pressure of margin erosion after Hon Hai Precision Industry Co (鴻海精密), the world’s largest electronic component maker, ventured into notebook production last year.
“After losing Hewlett-Packard Co’s consumer notebook orders and with Hon Hai joining the industry, Wistron has adopted a new strategy — diversifying into non-notebook product lines that offer better profit margins,” Grand Cathay Securities (大華證券) said in a report dated April 9.
Notebooks’ contribution to Wistron’s total revenues is projected to drop to below 70 percent this year, down from last year’s 70 percent to 75 percent, Grand Cathay said.
Company CEO Simon Lin (林憲銘) yesterday said diversification should help Wistron maintain its margins, with shipments of desktops, monitors and TVs expected to grow this year and increase even more next year.
“These [non-notebook products] will cushion the impact [from competition in the notebook market] and help us protect margins,” he said. Notebooks’ contribution to overall sales will decline to about 50 percent next year, he added.
The company expects to see major order deliveries of its all-in-one desktops and TVs in the coming quarters.
Citing TVs as an example, Simon Lin said Wistron’s production volume is expected to double to 12 million units next year, which would help the company in cutting down costs as economies of scale grow.
Wistron’s board yesterday approved a proposal to distribute cash dividends of NT$2.70 and a stock dividend of 5 percent.
To cope with future expansion, the board approved a fund-raising proposal to issue no more than 250 million common shares or global depositary receipts.
The company plans to invest US$20 million to form an e-waste recycling company in Kunshan, China, as part of its green business development.
It will plans to invest US$10 million into iSGT Global (新設信息超級網格集團) and its Chinese subsidiary to develop cloud computing businesses.
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