PC vendor Asustek Computer Inc (華碩電腦) yesterday saw its share price dive to its lowest level in about 19 months, after sagging PC demand drove down quarterly net profit by 83 percent year-on-year last quarter and led to a massive inventory stockpile.
Asusek stock tumbled 7.09 percent to NT$262 yesterday as the disappointing earnings report triggered a sell-off, bringing the its price to a level not seen since Jan. 7 last year.
Asustek said net profit plummeted to NT$1.89 billion (US$63.06 million) during the quarter ending June 30, compared with NT$11.37 billion in the second quarter last year.
That was a quarterly decline of 82 percent from NT$10.43 billion. Earnings per share dipped to NT$2.6 last quarter, compared with NT$15.3 a year earlier and NT$14.0 a quarter earlier.
The company attributed the net profit reduction to supply chain turmoil, logistics snarls, international COVID-19 restrictions, global economic headwinds and surging inflation, which depressed PC demand and shipments.
Operating profit margin dropped to its lowest level in about 20 years at 1.7 percent last quarter, from 11.2 percent in the second quarter of last year and 7.9 percent in the first quarter of this year. Foreign exchange losses reached NT$699 million, also a drag on performance.
Asustek set an aggressive target to boost its operating profit margin to between 3 and 4 percent this quarter and next year, Asustek co-CEO Samsun Hu (胡書賓) told investors during an online conference on Thursday.
“The second quarter should be the trough of this year,” Hu said.
The company also aims to cut NT$50 billion of inventory from an accumulation of NT$206 billion as of June 30, after surging 59 percent from a year earlier.
About half of the inventory comprises high-priced chips, panels and memory modules, it said.
Asustek aims to grow PC shipments at a quarterly pace of 15 to 20 percent this quarter, against the industry’s broad downtrend.
The company said its confidence is built on resilient growth momentum from gaming PC’s, high-end OLED PCs and commercial PCs.
Shipments of motherboards and graphics cards are expected to be flat, although shipments would still increase about 5 percent quarter-on-quarter, it said.
The PC industry is expected to go through a drastic correction in the following quarters to the second quarter, or even the third quarter of next year, given lingering geopolitical tensions and soaring inflation, Hu said.
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