Pegatron Corp (和碩) expects earnings to begin improving next quarter as new products are launched ahead of the high-season in the second half of this year.
Sales this quarter would continue to see declines that persisted during the slow season in the first three months of the year, chief executive officer S.J. Liao (廖賜政) told a teleconference yesterday.
However, revenue contribution from laptop and desktop computers was expected to shrink by 10 to 15 percent, with non-information technology related products expected to be more resilient to the slump and see smaller declines, Liao said.
Total sales during the second quarter are expected to show a double-digit growth from a year earlier, Liao said, adding that the contract electronics manufacturer would see diminished foreign exchange pressure as the New Taiwan dollar weakens.
First-quarter results were a hard hit, as increasing competition and margin compression took a toll on the Taipei-based company.
Net income fell to NT$2.08 billion (US$69.63 million), down 46.4 percent from the same period last year, while earnings per share were NT$0.8, down from NT$1.51.
Sales rose 17.5 percent year-on-year to NT$280.89 billion, while gross margin dropped to 3.3 percent, from 5 percent, with operating margin plummeting from 2.3 percent to 0.8 percent.
Chief financial officer Charles Lin (林秋炭) said Pegatron did not see a significant decline in average selling prices in the past quarter.
However, it was not able to meet its goal of achieving efficiency gains through efforts at vertically integrating its subsidiaries, Liao said.
The manufacturer was also burdened with rising capital expenditure in a bid to expand capacity and initiate product transitions at its subsidiaries, such as Casetek Holding Ltd (鎧勝), a metal casing maker that recently secured a spot in Apple Inc’s supply chain.
Although competition has been tougher as rivals expand their production capacities and outpace demand growth in the sector, the company would continue its expansion plans, Liao said, noting that smartphones still represent the biggest demand for metal casing.
Vertical integration is part of the firm’s long-term strategy and some growing pains are to be expected, Liao said.
The firm has made the same leap as when it transitioned from the PC to the mobile era, while its subsidiaries, including Kinsus Interconnect Technology Corp (景碩), are transitioning to more advanced market segments and broader product mixes, and costs would be higher during the period, he said.
Kinsus is a silicon substrate manufacturing arm of Pegatron.
“In about two years we could see vertical integration plans begin to pay off and bring improvements to margins and shortened learning curve,” Liao said, adding that costs are expected to be higher during the process.
The company also has plans to cut its reliance on consumer products and tap into more stable revenue streams from commercial and industrial customers, he said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS