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UPDATE 1-Compal books first-ever quarterly loss, places hopes on mobiles
November 13, 2013 / 9:38 AM / in 4 years

UPDATE 1-Compal books first-ever quarterly loss, places hopes on mobiles

* Q3 net loss totals $92.27 million due to one-time swap

* Core PC business revenue to be cut to 70 pct in 2014

* Smartphone, tablet revenue to be 20 percent in 2014

By Michael Gold

TAIPEI, Nov 13 (Reuters) - Taiwan’s Compal Electronics Inc , the world’s second-largest contract manufacturer of notebook PCs, posted its first-ever quarterly loss, but promised an aggressive push next year into mobile devices like tablets and smartphones to raise revenues.

The company, which recently nabbed orders for Apple’s next-generation iPhone, according to supply-chain sources, said on Wednesday it suffered a third-quarter net loss of T$2.73 billion ($92.27 million), mainly due to a T$4.9 billion one-time loss from a share swap by its telecom carrier arm Vibo with Taiwan Star in a divestment.

The company will start making Apple devices starting next year. It also makes computers for Acer Inc and Lenovo Group Ltd.

Tablets and smartphones will occupy a greater share of the company’s revenue going forward, chief financial officer Gary Lu told analysts during an earnings conference.

The company plans to pare its core business of producing notebook PCs from 82 percent of its revenue this quarter to 80 percent in the fourth quarter and 70 percent in 2014.

Lu said he expects combined smartphones and tablet revenue to make up 20 percent of the company’s revenue in 2014, with more than 15 million tablets expected to ship next year, double this year’s output.

In September, Compal Electronics announced it would buy the entirety of its subsidiary, handset maker Compal Communications , a move that analysts view as the main driver of the push into mobile and next-generation devices from slow-growth, low-margin traditional PCs.

According to research firm IDC, global PCs sales fell nearly 10 percent in the third quarter of 2013 from a year earlier.

“This is a necessary step for them,” said Wanli Wang, an analyst at CIMB Research in Taipei. “With consumer preferences changing the way they are, if they continue focusing on notebooks, there isn’t any new catalyst for growth.”

Before the earnings announcement, the company’s stock had fallen 2.1 percent, versus a 1.1 percent fall for the broader Taiwan market.

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