After posting a net profit decline last year, gaming PC maker Micro-Star International Co (MSI, 微星科技) yesterday forecast growth for next quarter, as PC demand rises due to coronavirus-driven remote working and schooling.
Net profits last year fell to NT$5.59 billion (US$184.88 million), from NT$6.04 billion in 2018, which translated into earnings per share of NT$6.61, down from NT$7.15. Gross margin contracted to 13.16 percent from 13.6 percent.
MSI attributed the profit decline to inventory depletion of graphics processing units for cryptocurrency mining PCs, as well as heavy costs tied to relocating operations to Taiwan, amid a trade dispute between the US and China last year, president and CEO Chiang Sheng-chang (江勝昌) told investors.
Compared with the challenges the company faced last year, Chiang said he was more confident about the effects of the COVID-19 pandemic on the company.
“The pandemic is creating a lot of uncertainties ... but looking at current orders, I believe we still have strong market demand to rely on, which might even increase with the growing trend of telecommuting and distance learning,” he said, adding that much of its popular PC models have since sold out.
Citing the similarities between the situation in Europe and the US and the COVID-19 outbreak in China two months ago, Chiang said that overall market demand for PCs would recover once the virus is contained.
“The impact on PCs and other network and communication devices should be smaller compared with that on general consumer electronics,” he said.
The company is nevertheless seeking to cut operating expenses this year through freight cost management, while retaining a higher cash flow through smaller payouts to shareholders, MSI chairman Joseph Hsu (徐祥) said, suggesting a cash dividend of NT$4.2 per share.
MSI expects revenue in the first quarter to decline nearly 10 percent year-on-year to NT$27 billion, but would recover in the second quarter, boosted by upcoming launches of new central processing units and graphic cards from Intel Corp, Advanced Micro Devices Inc (AMD) and Nvidia Corp, Hsu said.
Those new chips would boost demand for MSI products and raise the average selling prices of PCs and motherboards, Hsu said.
Gross margin is also expected to improve next quarter, he added.
MSI is focusing heavily on its content creation product line that includes laptops, desktops and monitors, which is to make up about 20 percent of the company’s overall shipments, similar to last year.
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