UPDATE 1-Asustek sees sales of low-cost Eee PC doubling in 2009

Mon Jun 2, 2008 2:27am EDT

(Recasts with details, quotes, analyst comments)

By Sheena Lee

TAIPEI, June 2 (Reuters) - Taiwan's Asustek Computer Inc (2357.TW), the maker of low-cost Eee PCs, said on Monday it expects sales of the handbag-sized laptops to double to around 10 million units next year on strong demand from Europe, Asia-Pacific, and India.

The company, which had previously estimated that it would sell 5 million Eee PCs this year, forecasts low-cost PC sales are set to hit 20-30 million units globally in 2009, Asustek's Chief Executive Jerry Shen told reporters.

Asustek is showing its latest Eee PCs at Computex, the world's second-largest PC fair which runs between June 3-7 in Taipei.

Asustek said it hopes sales of Eee PCs will help lift its market share in North America -- currently only 1 percent -- as the subprime crisis and rocketing fuel costs take their toll on consumer spending.

The Eee PC, far the most popular model of smaller, low-cost PCs known as netbooks, is seeing the strongest demand from Europe and Asia-Pacific, and expects growth to pick up in emerging markets like India, Asustek said.

"Asustek is among our top picks in hardware stocks due to improving execution post restructuring, strong brand positioning and substantial notebook share gains, Eee PC sales and greater exposure to emerging markets," said Ellen Tseng, analyst at Nomura Securities.

Asustek shares closed up 1.5 percent on Monday, outpacing the main TAIEX's .TWII 1.2 percent gain.

Some analysts are concerned that Eee PCs will soon face fierce competition from PC leaders, such as Dell DELL.O, Hewlett-Packard (HPQ.N), and Acer (2353.TW), which are going after the low-cost market.

"It could get harder for them in terms of competition, and as margins are slim for Eee PCs, it could be a challenging race ahead," said Daiwa Institute of Research analyst Calvin Huang.

Asustek competes with larger rival Acer in its own-brand business and electronics maker Hon Hai Precision Industry Co (2317.TW) in contract manufacturing.

Asustek has said it hoped to become the world's fifth-largest laptop PC seller by 2010. It also makes laptops for Apple (AAPL.O) and Dell, and had spun-off its manufacturing business into a separate company earlier this year. (US$1=T$30.3) (Reporting by Sheena Lee; Editing by Louise Heavens)

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