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[DigiTimes] Asus expects significant profit decline

post #1 of 9
Thread Starter 
Quote:
Asustek Computer may record a profits decline of 10-20% in 2008 due to excess inventory and missed projections, sources find. Meanwhile, affected by the parent company's downward forecast, subsidiary Pegatron Technology will reportedly halve its workforce in China by the end of this year.

Pegatron will likely cut workforce at its plants in Suzhou and Shanghai, China, to only 45,000 employees by the end of 2008, according to the sources. The company has undertaken staff reductions since the second quarter, when the workforce totaled almost 90,000 employees, indicated the sources.

Asustek is estimated to generate profits of NT$22-24.7 billion (US$657-737.5 million) this year, down from NT$27.5 billion in 2007, sources expect. The company has not seen a decline in profits 2002 when it recorded a drop of about 40%, the sources noted. In line with the company's negative profits performance, Asustek has downgraded its notebook shipments goal by one million units. The company will also see a 11% drop in graphics card shipments and only 3% growth in full-year motherboard shipments.

Asustek posted revenues of NT$24.8 billion for its own-brand business in November, down 10% on year. Market watchers have estimated that the company's own-brand sales may reach NT$270.8 billion in 2008, up about 20% from last year.

In a response primarily directed at analysts, Pegatron said that under the current economic climate, staff layoffs are a reasonable strategy, and confirmed that it is trimming its workforce. However, it denied that up to 50% of staff will be laid off this month, saying that under China's new labors laws, firing 45,000 workers in a single month would draw the attention of the China government. Digitimes attempted to contact Pegatron to clarify whether or not layoffs have been ongoing since the second quarter as sources claim (as opposed to in a single month as per Pegatron's denial), but the company did not respond by the time of publication.

Pegatron also said in its statement that, along with other companies in China, it is hoping that 20%-30% of its workforce will not return to work after the Lunar New Year holidays in late January next year. Pegatron said that in past years it was common that 20% of staff would not return to work resulting in a "natural" reduction in head-count.
source
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post #2 of 9
Just met with our ASUS rep yesterday and asked them about earnings. Quite a somber conversation. He did say that due to the excess inventory they are going to drop some prices to move stock... Let's see if it matters.
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post #3 of 9
Wow, wasn't expecting that. Hopefully Asus doesn't go under. Damn, half the workforce in China... you know they are in trouble.
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post #4 of 9
Thread Starter 
guess this means lower priced hardware is coming, hope they don't start skimping on quality for cheaper production though...
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post #5 of 9
Hate to see it happen, but our economy reflects elswere. If we have no jobs to buy, they have no jobs to produce. The price cuts will bring cheap($ money wise) parts but at a loss. It will pick back up when the economy turns and they will get bum-rushed. I have had this happen to the company I used to work for be off weeks at a time (Every election) then full throttle untill the next.

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post #6 of 9
Let's just hope this means the first AM3 motherboards will be cheaper
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post #7 of 9
Damn, i like lower prices but i feel sorry for the workforce. Hopefully the cruch isn't hitting Asus too hard.
post #8 of 9
Yes! Poor ASUS though.

cg
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post #9 of 9
Quote:
Originally Posted by airbozo View Post
Just met with our ASUS rep yesterday and asked them about earnings. Quite a somber conversation. He did say that due to the excess inventory they are going to drop some prices to move stock... Let's see if it matters.
Now that is quality inside information there, prices about to drop. And exactly what i wanted to hear, if i had the money for a laptop. Oh well.
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