October 30, 2008 / 10:43 AM / 10 years ago

UPDATE 1-Asustek Q3 profit falls, cautious on Q4

* Q3 net profit falls 14 pct, below expectations

* Netbook shipments rise to match its conventional laptops

* Company expects netbook shipments to double in 2009

* Motherboard business remains stable (Adds details and quotes)

By Kelvin Soh

TAIPEI, Oct 30 (Reuters) - Taiwan’s Asustek Computer (2357.TW) posted a bigger-than-expected 14 percent fall in third-quarter profit, blaming slower sales of motherboards and laptops, and gave a cautious outlook for the current quarter.

Asustek remained bullish on the prospects of its line of smaller, lower-cost, lower-profit notebook computers, also known as netbooks, predicting growth of 100 percent in 2009.

The company brushed off the prospect of its netbook sales cannibalising into their notebook business as a slowing global economy prompts consumers to reduce spending.

“The impact on notebook sales as a result of the Eee PC should be limited,” Asustek President Jerry Shen told an investor conference.

“The netbooks we sell are all 10-inches in size at most, and as such may affect the sales of our 11-inch notebooks. But we don’t sell many 11-inch notebooks to begin with, so there won’t be much impact,” Shen said.

But he revised downwards its shipment target for conventional laptops to 5.9 million and 6.1 million from 6-6.6 million units this year, citing the current financial crisis and slower growth.

Asustek, which sells laptops under its own name and competes with Hewlett-Packard (HPQ.N), Dell DELL.O and crosstown rival Acer (2353.TW), reported on Thursday a net profit of T$6.38 billion ($195 million), versus T$7.44 billion a year ago.

The result was below the consensus estimate of T$6.96 billion forecast by 11 analysts polled by Reuters Estimates.

The number of netbooks it shipped rose to the same level as its conventional laptops.

The company said it shipped 1.7 million of its low-cost Eee PC in the third quarter, on the upper end of its original forecast of 1.5-1.8 million units and predicted fourth-quarter sales of between 1.6 million to 1.8 million units.

The company is also the world’s top maker of motherboards, the central circuit boards in all computers, but said it expects fourth-quarter motherboard shipments to fall 10 percent from the third quarter.

It remained confident of its prospects in the motherboard business, telling investors that there were very companies left in the industry and they were well-positioned to weather any turbulence.

It also remained ambiguous on local media reports that it wanted to increase its shipment output by 77 percent to 20 million laptops in 2009, explaining that the number was used during internal meetings but that there could be some revision.

Notebooks and netbooks that it sells under the Asus brand name have become an increasingly important part the company’s business, making up 69 percent of its third-quarter revenue, it said.

Asustek, which pioneered netbooks when it first launched the Eee PC line about a year ago, saw another competitor join in the foray on Wednesday when Hewlett-Packard launched its own line in the fast-growing category.

Analysts say only two or three PC makers are likely to get the sufficient scale to succeed in netbook market, which typically cost between $400-$600.

Asustek announced its results after the Taiwan stock market closed on Thursday. Their shares had risen 6.9 percent compared to a 6.3 percent jump in the benchmark TAIEX index .TWII. (Additional reporting by Argin Chang; Editing by Lincoln Feast) ($1=T$32.8)

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