ECS: Significant shipment growth to be seen in barebones only in 2003

Elitegroup Computer Systems (ECS) expects barebone systems to drive its sales growth this year, given its loss of Apple Computer notebook orders and continuing fierce competition in the motherboard market.With the loss of the Apple orders, ECS expects its motherboard sales will again account for over 50% of its revenues. Last year, boosted by the iBook orders and the company’s DeskNote products, ECS’s sales ratio from motherboards dropped as low as 41% at one point. For 2003, ECS projects that its notebook (including DeskNote) shipments will reach only 813,000 units, a decrease of nearly 30% from 2002. Besides the loss in Apple orders, analysts added that weaker DeskNote sales would also contribute to fall.Though ECS estimates that it will generate most of its revenues from the motherboard business again this year, it expects little growth in sales and shipments from the sector. For 2003, ECS forecast that its board shipments would rise slightly to 17.85 million units, giving the company a global market share of 13.9%, a drop of 1.3 percentage points from 2002. Meanwhile, anticipating that competition in the motherboard market will remain stiff, ECS predicted that its product ASP (average selling price) will decline to US$41.85 from US$43.59 in 2002.In 2003, a more significant sales increase is expected only in ECS’s barebone systems. With the launch of its "EZ-Buddie" mini-barebone systems this year and plans to land OEM orders in the sector, ECS predicted that its barebone system shipments will jump by 84.2% to 536,000 units.ECS on April 29 surprised the market with its latest financial forecast for 2003, projecting not only a 26% decline in revenues but also a 53.8% drop in net profits, which would translate to a record-low gross margin of 5.6%.Source: DigiTimes