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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 wallijonn on 11/1/2011 11:01:26 AM , Rating: 2
quote:
Meanwhile we in the U.S. look on forlornly wondering what might have been had we not decided that jobs were more important than improved efficiency. If you pass up an easy efficiency improvement in order to protect something else (be it jobs, profit, or whatever), your decreased competitiveness opens the door to someone else swooping in and stealing away your business.


The swooper usually has cheaper labour, not better robots, since robots cost a lot of money.

The problem is the current state of Corporate Capitalism, where a CEO makes 1000x the salary of the lower worker instead of 10x-100x, as it was years ago. When he gets a raise the same amount of people, usually at the lowest rung on the corporate ladder, are laid off.

The American Car Industry got in the mess that they're in because of marketing, not because of labour. The past two decades the people were sold on higher profit SUVs, not gas efficient and reliable cars. It was greed that killed the electric car. It was greed that drove SUV sales. And it was greed that caused the present economic downturn. Marketing is driven by the board & Wall St., who only think of the bottom line.


RE: Wisdom is dead.
By YashBudini on 11/1/2011 11:42:25 AM , Rating: 2
But all the pundits employed by Rupert Murdoch say it's all the unions fault. Was that Faux News?

quote:
Marketing is driven by the board & Wall St., who only think of the bottom line.


quote:
Marketing is driven by the board & Wall St., who only think of the sort term bottom line.


Fixed it for you.


RE: Wisdom is dead.
By KamiXkaze on 11/1/2011 9:37:40 PM , Rating: 2
Part of the reason SUV did so well was at the time the U.S. had cheap gas, plus they found a loop hole avoiding the gas guzzler tax. When gas got high exit the demand for SUV.

kXk


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