UPDATE 2-Quanta, Compal face weaker demand after strong Q2

* Quanta Q2 net T$5.1 bln vs consensus of T$5.4 bln

* Compal Q2 net T$6.4 bln, beats mkt forecast of T$5.7 bln

* Analysts see earnings of both firms peaking in Q2

* Quanta sees Q3 shipments flat to down slightly from Q2

* Quanta shares at lowest in over 1 year ahead of results
(Recasts; adds analyst comments and details)

By Baker Li

TAOYUAN, Taiwan, Aug 31 (Reuters) - Top contract laptop
makers Quanta (2382.TW) and Compal Electronics Inc (2324.TW)
face weaker demand after reporting a rise in quarterly
earnings, as consumers lap up sleek tablet devices.

The PC sector is struggling with slower demand from Europe,
China and the United States that has forced some computer
vendors such as Asustek (2357.TW) and Acer (2353.TW) to either
trim shipment targets or report falling monthly sales.
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Low-priced netbook computers had caught consumers' fancy
over the past few years at the expense of regular laptops. But
netbook sales have been hit as consumers get hooked onto
Apple's (AAPL.O) iPad and a slew of stylish, multimedia tablet
devices are due to hit the market.

Quanta and Compal produce more than half of all the world's
laptop computers, supplying to top global brands such as
Hewlett-Packard Co (HPQ.N), Dell Inc (DELL.O) and Lenovo
(0992.HK).

Quanta booked a net profit of T$5.1 billion ($159 million)
in April-June, up 4 percent from a year ago but missed a
consensus forecast of T$5.44 billion from analysts surveyed by
Thomson Reuters I/B/E/S.

Compal doubled quarterly profit to T$6.4 billion, but this
was below the first quarter's T$8.52 billion. The profit beat a
consensus forecast of T$5.75 billion.

Ahead of the results, Quanta shares fell 2.8 percent to its
lowest close in more than one year. Compal shares eased 0.6
percent in a broader market .TWII down 1.6 percent.
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Breakingviews on Ipad shift
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For story on global PC shipments in Q2
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STRONG HEADWINDS

"We won't touch the two stocks now because of all the
negative sentiment," said Bevan Yeh, a fund manager at
Prudential Financial Securities Investment Trust.

"The U.S. economy is slowing, then tech demand is slowing
and that's definitely not good news for exporters in Taiwan,"
said Yeh, who has no laptop-related shares in his portfolios.

Quanta shares have lost 16 percent and Compal has shed 8
percent in the past three months versus a 3 percent rise on the
main market .TWII.

Last week, Dell Inc (DELL.O) and Hewlett-Packard Co (HPQ.N)
dismissed worries about weakening technology demand, reporting
broad-based strength from corporate customers and only hints of
weakness from consumers.

Analysts are staying away from shares of laptop makers,
whose earnings may have peaked in the second quarter.

Analysts have downgraded 2011 earnings per share estimates
of Quanta by 3.3 percent over the past 30 days, according to
Thomson Reuters data.

On Tuesday, Quanta flagged a weaker third quarter due to
softer demand from developed countries including Europe.

"It looks like third quarter shipments will be flat to down
slightly, but the fourth quarter should be still okay," Quanta
President C.C. Leung told a news conference.

Leung said Quanta's fourth quarter shipments should be flat
or rise slightly from the third quarter.

Quanta kept its full-year shipment target unchanged at 50
million units, up 40 percent from last year.
(US$1=T$32)
(Editing by Ken Wills and Anshuman Daga)