Quanta Computer Inc (廣達), the main assembler of Apple Inc MacBooks and the Apple Watch, on Tuesday last week projected a 5 percent quarterly decline in notebook computer shipments this quarter, after notebook shipments increased 7.6 percent last quarter to 9.9 million units from the previous quarter.
However, the firm said it is upbeat on the cloud computing-based server business and expects double-digit percentage growth in shipments this year compared with last year.
The Linkou District (林口), New Taipei City-based company manufactures cloud servers for clients such as Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google.
The guidance came as Quanta released its third-quarter bottom-line figures, which showed net profit beating market expectations and profit margins improving from the previous two quarters, even though analysts expect the company to see weakening demand in the next two quarters.
The company’s notebook shipment forecast for this quarter is conservative, despite Apple’s launch of new MacBook products, analysts have said.
There are also ripple effects on low-end consumer PCs due to a shortage of Intel Corp central processing units (CPUs), which began in the second quarter, they added.
“We are concerned about Quanta’s business outlook for 2019, given uncertainties from the CPU shortage and the US-China trade war,” Daiwa-Cathay Capital Markets Co Ltd (大和國泰證券) analysts led by Steven Tseng (曾緒良) said in a research note.
To cope with the trade war, Quanta said it has moved some capacities from China to Taiwan for its server clients who are willing to absorb the relocation costs.
During the July-to-September quarter, the company’s net profit increased 17.8 percent annually and 33.2 percent quarter-on-quarter to NT$4.71 billion (US$152.5 million), beating Daiwa-Cathay’s forecast of NT$4.04 billion. Earnings per share (EPS) reached NT$1.22.
Gross margin was 4.39 percent, compared with 4.48 percent a year earlier and 4.45 percent in the prior quarter, while operating margin improved to 1.57 from 1.16 percent in the second quarter, but was still lower than 1.75 percent in the previous year, the company’s financial statement showed.
In the first three quarters of this year, net profit totaled NT$10.98 billion, up 2 percent from NT$10.77 billion in the same period last year, with EPS rising from NT$2.79 to NT$2.85, the statement showed.
Quanta said it is conservative on notebook demand next year, given the trade war and continued CPU shortage.
The company said it expects the cloud server business to maintain high growth momentum next year, driven by demand from hyperscale and enterprise clients.
It hopes to see revenue contribution from 5G and artificial intelligence-related applications by late next year at the earliest, it added.
Daiwa-Cathay raised its EPS estimate for this year by 4 percent to NT$3.96 after factoring in the better-than-expected third-quarter results.
Nonetheless, the brokerage cut EPS estimates for the next two years by 8 to 9 percent to NT$4.15 and NT$4.9 respectively, to reflect the lower margin forecasts on trade-war concerns, it said.
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