Compal Electronics Co (仁寶電腦) shares yesterday dropped to their lowest in the past seven trading days on concerns that the world’s No. 2 contract laptop computer maker would take over the North America TV market from its Japanese client Toshiba Corp.
Compal shares plunged 1.7 percent to NT$23.15, the lowest since Wednesday last week, after AFP reported on Thursday that Toshiba planned to license its North America TV business to Compal.
The benchmark TAIEX lost 0.69 percent yesterday.
The drop in Compal shares reflected investors’ concerns that a takeover of Toshiba’s TV business would not offer any upside for Compal, given the stiff competition in the price-sensitive North America market, an analyst from Yuanta Securities and Investment Consulting Co (元大投顧) said, speaking on condition of anonymity.
Toshiba’s announcement that it is withdrawing from the North America TV market might be the company’s first step toward completely exiting the overseas TV market, the Yuanta analyst said by telephone.
“Given that Compal accounts for 50 percent of Toshiba’s total TV shipments, the Japanese company’s move to shut down its overseas TV businesses will significantly impact Compal’s sales in the long term,” the analyst said.
Compal bought two TV manufacturing plants from Toshiba — one in Mexico in 2011 and one in Poland in 2013, the analyst said.
Before gaining orders from new clients, Compal needs to minimize the impact of the loss of orders from Toshiba by agreeing to make and sell TVs under Toshiba’s brand in North America, the analyst said.
The company shipped 4 million TVs last year and it expects to ship 4.5 million units this year, thanks to orders from new clients in South Korea and China, the analyst said, citing figures provided by Compal’s management.
“To be honest, we do not think the licensing business model can be sustainable, as the TV business in North America is very competitive and Compal has no successful branding experience,” the analyst said.
The analyst expects Toshiba to license its European TV business to Compal in the near future if the Taiwanese firm agrees to take over Toshiba’s TV business in that market. However, such a move is likely to further heighten the company’s downside risks, the analyst said.
Compal had not responded to requests from the Taipei Times for comment as of press time last night.
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