Compal Electronics has announced revenues of NT$203.7 billion (US$6.62 billion) for the third quarter of 2010, down 6% sequentially, while gross margin dropped from 4% to 3.8%, with net profits and EPS reaching NT$3.85 billion and NT$0.89.
For the future, the company expects its notebook shipments in the fourth quarter of 2010 to grow close to 10% from 11.7 million units in the third quarter, while shipments in the first quarter of 2011 are expected to stay flat on quarter or grow slightly based on the company's current order visibility. Compal also hopes that the company's on-year notebook shipment growth in 2011 will be able to surpass the notebook market's expected average of 15-20%, according to company spokesperson Gary Lu.
Lu pointed out that the company's dropping gross margin in the third quarter was mainly due competition, but as the company has been working aggressively over the vertical integration of upstream components, while lowering costs, he expects the percentage to stay level or grow slightly in the fourth quarter.
Compal's board of directors have also approved an investment project in Sichuan, China and is set to spend US$100 million to establish a second production site, aiming to start mass production in July-August of 2011 with annual notebook production capacity to reach 10 million units. The company will also invest US$40 million to expand its notebook and LCD TV production capacity at its plants in Kunshan, China. The two investments will help increase Compal's annual notebook capacity to 70 million in the future.
Lu also pointed out that notebook demand is stable, but the rise of emerging markets such as China is starting to change seasonality patterns. In the past, China only accounted for 5% of the global notebook market, but the share has recently increased to 10% and will advance to 20% in the future. Notebook shipments in China are expected to double after four years and the shipment proportion between the first and second halves has already changed from 4:6 in the past to 5:5 currently.
Compal's LCD TV shipments are expected to reach 4.5-5 million units in 2010 and it is set to ship at least eight million units in 2011.
As for tablet PC products, Compal will start shipping some ARM-based products in the first quarter of 2011.