Cheap Laptops, Netbooks Hit Asustek Sales in Q2

The good news for netbook pioneer Asustek Computer is that sales of netbooks and a new series of small, light laptops that use Intel CULV (consumer ultra low-voltage) microprocessors flourished in the second quarter and will be even better in the third quarter.

But the bad news is these smaller versions of a laptop PC cut into sales of standard Asustek notebook computers, sending overall sales down 15.6 percent year-on-year to NT$48.98 billion (US$1.49 billion) in the second quarter.

The company shipped 1.1 million Eee PC netbooks in the second quarter and 1.2 million laptop PCs. The laptop shipment figure beat Asustek's forecast for the quarter due to strong sales of its U-series CULV laptops. Notebook PC makers in Taiwan have turned to ultra low-voltage microprocessors from Intel to create thin, light laptops similar to Apple's MacBook Air, with long battery life.

The downside of CULV laptops and netbooks for vendors is their lower price compared to mainstream laptop PCs. Analysts had feared the devices would cut into sales of regular-sized laptop PCs, which cost hundreds of dollars more, particularly as consumers reduce spending amid the global recession. Asustek's sales in the second quarter confirmed those fears. The company's gross profit margin fell 40.5 percent year-on-year in the second quarter, to 16.3 percent.

Asustek turned to a loss of NT$131 million in the quarter, compared to a net profit of NT$5.64 billion in the same period last year. The loss was partly caused by changes in currency values, particularly in the euro compared to the Taiwan dollar.

In the third quarter Asustek forecasts notebook shipments will rise to 1.8 million units, led by CULV laptops, while netbook shipments will reach around 1.5 million.

"CULV shipments will rise by 10 percent to 20 percent compared to the second quarter," said Jerry Shen, CEO of Asustek, at an investors' conference in Taipei.

"We still view the netbook as a second laptop computer for people, not a primary laptop," he said. Next year, he predicts netbook shipment growth will slow down to match that of laptop PCs. Currently, netbook shipment growth continues to outpace laptop growth.

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