Compal sees Q3 shipment increase

Although Quanta recently lowered its production forecast for this year, Compal president Ray Chen remains upbeat about his firm's outlook

Compal Electronics Inc (仁寶電腦), the world's second-largest notebook maker, said yesterday that it expected to see robust notebook shipments in the third quarter as orders from big clients are being churned out.

The company's notebook shipments in the current quarter are expected to rise as much as 40 percent from the previous quarter to reach around 3.9 million units, Ray Chen (陳瑞聰), company president and chief executive officer, told investors yesterday.

"Shipments will even grow to more than 4 million if the demand is stronger," he said.

The company said it is still planning to ship a total of 15 million units for the year, even though rival Quanta Computer Inc (廣達電腦) recently cut its annual forecast from 24 million to 21 million.

"We are confident of shipping more than 14 million notebooks, but the 15 million target will depend on fourth quarter demand," Chen said.

Compal yesterday reported an 8 percent reduction in its second-quarter net income to NT$1.69 billion (US$52 million), or NT$0.46 per share, from NT$1.83 billion, or NT$0.53 per share, during the same period last year.

Gross margin was below 5 percent for the first time, at 4.7 percent, compared with 6.2 percent a year ago, while net sales grew 17 percent to NT$60.62 billion, Compal said.

Chen attributed the sluggish performance to the slower-than-expected growth in notebook shipments, as Europe's demand did not live up to the expectations of the World Cup and consumers held back purchases to wait for processor price cuts.

The notebook maker's second-quarter laptop shipments grew only 5 percent from the previous quarter to 2.8 million, instead of the earlier projected 15 percent.

As the company's earnings did not surprise analysts, SinoPac Securities Corp's (建華證券) Allan Pu (卜正倫) said that Compal needs to make improvements in its affiliates' performances in order to boost its financial results this year.

Vibo Telecom Inc (威寶電信), in which Compal holds a 29 percent share, is expected to incur losses of NT$6 billion this year, while whole-year cellphone shipments for Compal Communications Inc (華寶通訊) have been slashed from 75 million to 68 million.

Even so, Compal painted a rosy outlook, with spokesman Gary Lu (呂清雄) saying there was a good chance of seeing another record high in monthly notebook shipments at 1.5 million in later months.

Compal reported a record high in monthly shipments in June and last month with 1 million and 1.25 million units, respectively.

The outlook next year will even be rosier, with global notebook shipments to rise to more than 90 million units, from 73 million this year, Chen said.

The growth will be mainly driven by the maturing wireless applications, and the long-awaited launch of Microsoft Corp's new operating system, Windows Vista, in the first quarter next year, he said.

Chen brushed off market speculation that the company was planning to acquire Arcadyan Technology Corp (智易科技), a subsidiary of wireless equipment maker Accton Technology Corp (智邦科技).

He said the company would enlarge its production deal with Accton, but would not merge with it.

To ensure a diversified product portfolio, Compal's non-notebook products -- such as liquid-crystal-display TVs and monitors, wireless products and portable media players -- will account for 20 percent of total company sales by 2008, the company said.

Currently, notebooks account for 90 percent, the company said said.

Shares of Compal closed up 3.5 percent to NT$29.30 on the Taiwan Stock Exchange yesterday.

source: Taipei Times