Wed, Aug 23, 2000 page18

• Umax upgrades expected profits

  BRIGHTER PROSPECTS After two years of negative profits, the scanner and digital camera maker expects increased market demand and new products to boost sales

  • By Thomas Ker / CONTRIBUTING REPORTER
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  Umax Data Systems Inc, one of the world's largest manufacturers of scanners and a maker of digital cameras, said yesterday it would be readjusting upward its expected revenue for the year as strong sales of new products and continued orders from large computer makers in the US boost earnings after two years of negative profits.

  Umax yesterday reported revenue for the first six months of NT$3.33 billion and net income of NT$310 million, or NT$0.72 per share.

  It has a current revenue target for the year of NT$10 billion, with a pretax profit of NT$110 million, but said it would adjust the target upward shortly.

  Last year, it reported a loss of NT$2.248 billion, for a negative earnings per share of NT$5.23.

  "Demand in the market is very good, and prices for scanners are quite stable," said Eric Tang, spokesman for Umax.

  Profit margins for scanners have risen to 15 percent, from 8 percent last year, according to local media reports.

  "We also have new products such as Internet integrated products with low cost and high value added features that will bring in new profits," he said.

  As well as selling for the most part under its own name, Umax has continued to receive orders for scanners from several large international computer companies, including IBM, Dell, and Compaq.

  "More than 80 to 90 percent of products to the US are OEM," said Tang.

  In June, Umax began shipments of the first of over 200,000 scanners to Compaq following a cooperation agreement with the US-based company. According to the agreement, Compaq is to distribute Umax scanners bundled with PCs in the US, media reports said.

  Recent media reports have also suggested Umax last week received a large order for scanners from Hewlett-Packard Co. However, none of the reports have been confirmed by Umax.

  Prices for scanners have also settled down after several years of stiff price competition ate into scanner maker's profits.

  "There's not very much room for price cuts anyway," said Tang.

  The tight margins were one of the reasons the company passed production of its medium and low-tech scanner production to China to improve its cost structure. The move also means Umax can now concentrate more on designing and producing Internet integrated IA products with redefined scanner usage.

  "We think in the Internet era, everyone will need a scanner for their own homepage or to send documents," said Tang. "It will become a good personal communication device," he said.

  Umax's new Astra 3400 scanner, released in early August, is an example of things to come. The product allows the user to directly scan and copy or e-mail data, and at US$99, is considered attractively priced.

  But bugs in its utility software make it a frustrating machine to use, said Winmag.com in June.

  Nevertheless, the release of new products such as the Astra 3400 is expected to contribute to and count for an increasingly large part of the company's revenue as demand increases, and as the company moves away from the production of simple scanners.

  "Everyone will need scanners to communicate," said Tang.

  The promising financial figures, market rumors about HP and the start of the busier second half year for scanner products have had a positive effect on Umax's share price in recent days.

  Umax's share price rose 6.44 percent yesterday to NT$15.70, and has risen 21.7 percent since Saturday. Yesterday's stock turnover of 10.79 million shares was the highest since May.
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