Pegatron Technology has announced consolidated revenues of NT$115.4 billion (US$3.57 billion) for the third quarter of 2010, up 11.1% sequentially, but down 21.6% on year, with gross margin dropping from 4.5% to 3.2% and net profits also down 14.7% sequentially to only NT$1.45 billion, equivalent to an EPS of NT$0.64.

Pegatron CEO Jason Chang pointed out that the company's dropping gross margin was caused by exchange rate fluctuations as well as changes in product mix and recognition of a one-time cost. Chang expects the company's gross margin to rebound above 4% in the fourth quarter if the exchange rate issue is excluded and revenues should grow about 5% sequentially.

Pegatron shipped 12 million notebooks in the first three quarters of 2010 with a goal to ship 16 million units in 2010. The company's shipments in 2011 are also expected to surpass 20 million units, surpassing Inventec and competing against Foxconn Electronics for the fourth largest. Pegatron's LCD TV shipments are expected to reach only 2-2.2 million units in 2010, lower than the company's original goal of 2.5 million units.

The company's motherboard and desktop shipments in the fourth quarter are expected to see a single-digit growth, while revenues from consumer electronics business will drop about 5% compared to the second quarter. Revenues from communication products will see slight growth.

In the third quarter, consumer electronics segment's revenue contribution increased from 16% in the second quarter to 27%, benefiting mainly from increasing games console shipments. PC product segment has seen its share drop from 71% in the second quarter to only 61%. Communication segment accounted for only 12%.

As for tablet PCs, in addition to Asustek's Eee Pad, High Tech Computer (HTC) has also recently placed its tablet PC orders with Pegatron.