Asustek Computer Inc (華碩電腦) reported first-quarter earnings of NT$454 million (US$13.71 million), a decline of 93.7 percent year-on-year — a sign of recovery after a loss of NT$2.80 billion in the previous quarter.
Without major contributions from non-business-related items such as foreign exchange gains, the company’s first quarter performance would have fared even worse, as operating income booked losses of NT$3.11 billion.
The major problem with the company was falling sales for the quarter, during which it posted NT$46.21 billion in total revenues, a drop of 26.6 percent from same period last year and 31.6 percent from the previous quarter.
Chief executive officer Jerry Shen (沈振來) painted a realistic picture of the notebook business and said that because of the global financial crisis and lower consumer purchasing power, the average selling price of notebooks would never return to their previous levels. As such, the company would also not enjoy its historical high gross margin premium on its laptops, but only hoped to perform above the industry average.
Shen said the company was busy digesting its inventory in the first three months of the year and that as no new PC models had been introduced in the first quarter, sales were therefore lower.
“In addition, we booked a one-time loss of NT$851 million because of the cancellation of a Russian Eee PC project after the client later went bankrupt. After we transferred the products, which had already been manufactured, and reconfigured them for the Chinese market, there was little gross margin left to speak of,” Shen said.
Without giving specific guidance on the firm’s second quarter outlook, Shen said new notebooks and netbooks would be rolled out starting this month through early July, adding that as the company continued streamlining its product lineup, he expected this quarter’s gross profit margin to remain at the current level of 2.9 percent, with significant improvement occurring in the second half of the year.
Asustek has controlled operating expenses and hopes to see the right cost structure in the third or fourth quarter.
“Aside from cutting costs, our business strategy of having fewer PC models and bigger volume is also expected to complete its transition in the second half of this year,” chief financial executive David Chang (張偉明) said.
As Acer came out with its Timeline series notebook lineup earlier last month, Asustek said its own consumer ultra-low voltage (CULV) notebooks would start selling this month.
However, rather than introducing mainstream or mid-price range CULV notebooks as Acer has done, the company intends to begin by introducing high-end CULV laptops, he said.
In the first quarter, the Taipei-based company’s revenue breakdown was 60 percent for systems (notebook PCs and Eee PC family products), 39 percent for components (motherboards and VGA) and 1 percent for handheld devices.
Asustek shares traded limit-up to close at NT$43.85 yesterday. The shares are up 19.2 percent this year.
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