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Top Taiwanese firms forecast dropping demand

Tech earnings this quarter have been a mixed bag.  Apple, Inc. (AAPL), a perennial performer, shockingly fell short of predictions, leading a handful of analysts to downgrade its stock.  On the other hand, Apple's arch-rival Samsung Electronics Comp., Ltd. (SEO:005930) did better than expected lead by world-leading shipments of smartphones.

More earnings reports trickled in on Monday from Taiwan, and the overall message was consistent -- while sales were strong in Q3 2011, demand and price concerns for Q4 2011 have lead to outlook downgrades across the board.

Here's a handful of what arrived...

ASUSTEK Computer, Inc. (TPE:2357)
[Source]

Eee Pad Transformer
[Image Source: Android In]

Business segment:
laptop, netbook, tablet, and smartphone OEM
Revenue:
NT$96.347B ($3.22B USD)
Profit:
NT$4.68B ($157M USD) 
6.4% better than consensus; 9.4% down from Q3 2010, 30% up from Q2 2011
Units Shipped:
4.3 m laptops
1.3 m netbooks
630 k tablets
Q4 Outlook
4.1 m laptops
1.2 m netbooks
600 k tablets

Comments:
ASUSTek surprised with better than expected earnings.  However, the bad side of the news is that it forsees weakening demand in Q4.  It's no secret that the netbook market is drying up, but modest tablet sales (driven by the company's Android ASUS Transformer) for ASUSTek indicate that the company should survive that transition without major issues.  Supply issues remain a problem for ASUSTek, though, and are hindering tablet sales.

HTC Corp. (TPE:2498)
[Source]

Evo 3D and HTC Flyer
[Image Source: Google Images]

Business segment:
tablet, smartphone OEM
Revenue:
NT$135.82B ($4.55B USD)
0.5% lower than consensus
Profit:
NT$18.7B ($626M USD)
Units Shipped:
13.2 m "units" (tablets+smartphones)
Q4 Outlook
NT$125B-$135B ($4.19B-$4.52B USD)
9.0-15.7% lower than consensus
12-13 m units shipped

Comments:
Like ASUSTek, HTC predicted a relatively weak Q4.  Unlike ASUSTek, HTC disappointed in sales in the current quarter.  HTC has established itself as a top tier Android handset manufacturer, but it's struggling to break through to the next level -- vying with Apple and Samsung for the global sales lead.  It's also struggling to gain tablet market share.  And to top things off, HTC lost its request for a preliminary injunction against Apple's iPad and iPhone.  If the U.S. International Trade Commission decides to ban imports of HTC's smartphones and tablets as Apple is requesting, HTC now has much less bargaining room, as a result.

Hon Hai Precision Industry Co Ltd. (owner of Foxconn) (TPE:2317)
[Source]

Foxconn Workers
[Image Source: Telegraph UK]
 
Business segment:
gaming console, tablet, smartphone, mp3 player, laptop, desktop, and computer component ODM
Revenue:
NT$665.66B ($22.29B USD)
0.2% increase from Q3 2010
Profit:
NT$19.2B ($643M USD)
8.6% less than Q3 2010, 6.67% better than analyst consensus
Outlook:
not available

Comments:
Clearly Hon Hai's Foxconn unit's revenue was expected to be hurt by lower than expected shipments from its biggest smartphone customer -- Apple.  However, the company still managed to beat profitability expectations.  Virtually all electronics companies in the industry rely on Foxconn for some of their product manufacturing needs, so the company is somewhat of a barometer for the market in general.  The company is moving aggressively to replace volatile [1][2][3] and increasingly expensive Chinese labor with reliable robots.  It's also looking to migrate factories to Brazila and Inner China -- regions where costs remain relatively low.

Sources: ASUSTek, HTC, Hon Hai



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RE: Wisdom is dead.
By JasonMick (blog) on 10/31/2011 2:21:25 PM , Rating: 2
quote:
I addressed supply and demand, automation was not on the table.

If I understood you correctly, you argued that the death of manufacturing jobs would create a lack of demand.

I countered this explicitly, by pointing out that people would instead be making money off of other kinds of jobs (e.g. service sector or engineering jobs) so demand would NOT drop in the long term.

quote:
Shift offers 2 directions, up or down. What kind of shift are you seeing here?

Up. Automation allows society to have the same amount of product, with less physical work. Consequentially this frees man to pursue more mental work and produce superior products. Either way -- less work and same product, or better product and different kind of work -- mankind in general benefits.

And there's plenty of demand because service sector and engineering jobs pay money, and there's supply from the automated manufacturing, engineering, and service supply from the service sector.

quote:
Now there's irony . You really missed the Henry Ford argument, didn't you? Like every conceivable aspect of it. No demand, then what?

Again I didn't "miss" anything.

There's plenty of demand in America today. Service sector jobs and engineering jobs, et al. produce demand just like manufacturing jobs. Because they ALL PAY MONEY. That's the bottom line.

Automation does not change this.

There were paying jobs and thus demand before automation, and there's STILL paying jobs and demand after animation.

Your demand commentary is unfounded alarmist commentary, imho.


RE: Wisdom is dead.
By YashBudini on 10/31/2011 5:12:45 PM , Rating: 2
Again it has nothing to do with automation. It could just as easily be job exportation. Why keep bringing this up?

quote:
There's plenty of demand in America today.

The state of the current economy begs to differ.

Let me give you an example:

1. I had a list of things that I wanted to buy at some time or another. Operative word - had.

2. Lost my job. Spending is limited to bare necessities.

3. When I am employed again guess what? I will not be buying anything, for years pal, not just through next week. If ever actually.

Is that your version of demand at this point in what's routinely called the Great Recession? Or are all those people just alarmists as well?

And stuff I used to deem worn out to be thrown away? I continue to get use out of it, regardless of condition.

Now that's just my opinion, but in case you haven't noticed a blizzard is made up of individual snow flakes. No single unit amounts to anything. But add them all up. How many others think the same way about spending? Take a guess, just out of the last batch of lay offs?

You export or automate 1 profession and then the economy recovers, and again, and again (beyond your limited viewpoint of just manufacturing jobs). You really believe this can continue forever? No matter how many times it's been done? It will never have a negative impact on an economy? So what percentage of the nation will be doctors and what percentage will be hamburger flippers in this wonderful future utopia?

And before you bring it up, I spent the last 5 years retraining for a high demand job. Got a degree with honors, but junior and entry level jobs are being filled by people with many years of experience. Supply and demand again, not the theory you're preaching.

The Chinese are going to become more like the US middle class than they ever dreamed of and at a far faster pace. Like you they forgot what Ripley said:

quote:
You know, Burke, I don't know which species is worse. You don't see them f@cking each other over for a goddamn percentage.


quote:
Your demand commentary is unfounded alarmist commentary, imho

Speaking of "unfounded" I'd like to see some graphs on whether the "job creators" of the pre-21st century have actually done any job growth at any point in this century at all.

And I don't see any need to call me an alarmist. Chicken Little tried to get people to stop the sky from falling. I'm not making any attempt at that at all. Nobody's listening, let alone actually giving a damn. It simply is what it is. I just wish Henry Ford was here to voice his opinion.


RE: Wisdom is dead.
By YashBudini on 11/1/2011 11:47:58 AM , Rating: 2
Speak up Jason, I can't hear you.

Another odd thing about demand. DT has some of the slowest web services among these types of web sites, and yet what chance is there DT will start using decent horsepower to run it? So much for the T in DT, and thank the owner for doing his part in keeping this economy going.

I'm sure nobody is "alarmed."


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