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UPDATE 1-Taiwan's Pegatron to focus on mobiles, sees PC turnaround
March 24, 2014 / 8:16 AM / 4 years ago

UPDATE 1-Taiwan's Pegatron to focus on mobiles, sees PC turnaround

* Q4 net profit hits T$3.38 billion vs analyst estimates of T$2.84 billion

* Sees notebook shipment volume dropping 20-25 percent in Q1

* Sees Q1 revenue from non-computing business falling 15-20 percent (Recasts, adds background, details, company comment)

By Michael Gold

TAIPEI, March 24 (Reuters) - Pegatron Corp, a main assembler of goods for Apple Inc and other vendors, will enhance its focus on high-growth mobile and communication devices even as it sees a turnaround in PC sales in the near future, the company said during its quarterly investor meeting Monday.

Communications devices grew from 13 percent of company revenue in 2010 to 32 percent in 2013, according to company president and chief executive officer, Jason Cheng, while computing fell from 67 percent to 38 percent during the same time frame.

“Maintaining this kind of balance will be crucial for us going forward,” said Cheng, who also predicted a turn around in the industry-wide decline in PC sales by the second half of this year.

The first quarter will see quarter-on-quarter declines across the board, however, on weaker demand following the holiday season and higher-than-expected revenue in the fourth quarter.

Chief financial officer Charles Lin said the company expects revenue from its non-computing business to fall by 15-20 percent in the first quarter from the previous three months.

The company, which also makes computers for vendors like Toshiba Corp and Asustek Computer Inc, also sees notebook shipment volume dropping 20-25 percent in the first quarter from the previous three months. Motherboard and desktop shipment volumes are also expected to fall 30-35 percent in the first quarter on a quarterly basis, Lin said.

Pegatron earlier Monday reported a fourth-quarter net profit of T$3.38 billion ($110.48 million), well above the analyst estimates of T$2.84 billion and T$2.65 billion in the same period of 2012, driven by greater-than-expected demand in its computing sector and strong holiday sales.

The company reported full-year 2013 net profit of T$9.55 billion ($312.15 million).

The company is widely believed to be starting production soon on the next model of Apple’s popular iPhone, which many view as a major profit driver going forward.

Pegatron competes against the likes of fellow Taiwan contract manufacturer Hon Hai Precision Industry Co Ltd for orders from Apple, which benefits from the manufacturers’ scale and cost efficiency.

Analysts say Apple’s move toward diversification of its supply chain should provide minimal risk to Pegatron, the California-based tech giant’s second-largest supplier after Hon Hai.

Apple in January issued a weak revenue forecast on lower-than-expected iPhone sales, particularly in China. (Editing by Matt Driskill)

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