Credit Suisse Group AG yesterday lowered its earnings estimates for Asustek Computer Inc (華碩) following the company’s disposal of part of its stake in its spin-off Pegatron Corp (和碩) late last month.
The Swiss bank trimmed its forecasts for Asustek’s earnings per share for this year by 1 percent to NT$31.8 and by 8 percent for next year to NT$32.20 after Asustek told an investors’ conference on Monday that it would change how it accounts for its stake in Pegatron.
With its stake in Pegatron now lower than 20 percent, Asustek said it would use the cost method of accounting in the future instead of the equity method, which means Pegatron’s earnings would no longer be reflected in Asustek’s income.
“We expect earnings downgrades for global PC forecast cuts and for accounting of Pegatron,” Credit Suisse analyst Thompson Wu (武光明) wrote in a note to clients.
He rated the stock as “neutral” and cut its target price from NT$380 to NT$370.
When Pegatron was spun off from Asustek in 2010, the latter held 25 percent of Pegatron’s shares.
Asustek had hoped to deliver on its promise to lower its holdings in Pegatron since then, but was unable to do so because of the weakness in Pegatron’s share price during the past two years.
However, Pegatron’s share price rose dramatically this year, leading Asustek to sell a 4.5 percent stake in Pegatron on April 29, which lowered its holdings to 19.59 percent from 24.09 percent.
Shares of Asustek closed down 2.65 percent at NT$349 yesterday, despite solid first-quarter results announced on Monday.
Asustek met expectations when it on Monday reported a 3 percent quarter-on-quarter rise in net income in the January-March period to NT$6.05 billion, or NT$8.04 per share.
The company posted earnings of NT$5.89 billion, or NT$7.82 per share, in the fourth quarter of last year.
Although Asustek’s consolidated revenue declined 10 percent to NT$105.16 billion in the quarter, its operating margin improved to 5.3 percent, from 5.2 percent in the previous quarter.
In a separate report, British banking group Barclays PLC said Asustek has benefited from market share gains and growth in new products, such as tablets.
“We look for flat quarter-on-quarter sales in the second quarter of 2013, with new product launches at Computex in early June likely to boost [Asustek’s] outlook in the second half of 2013,” said Kirk Yang (楊應超), a Barclays analyst in Hong Kong.
The bank kept its “overweight” rating on Asustek shares and raised its target price from NT$390 to NT$400.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS