Compal Electronics Inc (
Net income fell to NT$1.0 billion (US$29 million) from NT$1.46 billion in the year-earlier period. Sales fell to NT$18.2 billion from NT$18.5 billion. Competition drove down notebook prices even as shipments rose a fifth over last year, analysts said.
Prices are likely to continue to fall as brandname computer-makers pass on lower prices to customers to boost sales, analysts said. Hewlett-Packard Co, a Compal customer, is poised to take over Compaq Computer Corp, which is expected to intensify competition and further drive down prices.
"The Hewlett-Packard and Compaq merger will add to the already competitive market environment," said Yalren Chang, an analyst at Taiyu Securities Corp (台育證券). "If the Taiwan dollar doesn't fall, margins will."
Computer companies are cutting prices to boost sales as slowing growth in the biggest economies prompts customers to delay buying or replacing PCs. PC sales are expected to shrink this year for the first time since 1985, according to International Data Corp.
Compal supplies Dell Computer Corp, which this year became the biggest PC maker by attracting customers with prices lower than those offered by competitors.
Compal, whose profits have benefited in the second quarter as the New Taiwan dollar depreciated against the US dollar, said income from non-operating sources fell as the currency stabilized and interest rate cuts by the central bank failed to stimulate Taiwan's economy and crimped its interest revenue.
The company said it expects sales to rise 30 percent in the fourth quarter from the preceding three month period.
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