KYE Systems expects its consolidated revenues for the first quarter of 2011 to decrease 20-25% to NT$1.94-2.07 billion (US$65.8-70.2 million) and corresponding gross margin to rise 0.1-0.6pp to 16.5-17% due to labor shortages in China, according to the company.

However, as the company already resolved its labor problems in early March, while new products are set to ship, the company expects its performance in the second quarter to return to normal, helping the company to achieve sequential growth.

KYE had consolidated revenues of NT$2.59 billion for the fourth quarter of 2010, down 15.1% on year with gross margin for the quarter of 16.4%, lower than the annual average of 17.9%.

As for 2011, KYE expects its shipment share of wireless mice to increase from 8-10% in 2010 to 20%, helping the company to raise its product ASPs and profitability.

The company will also focus on expanding into emerging markets in 2011, countries such as Argentina, Colombia, Chile, Mexico and Brazil in South America; Indonesia, India and Vietnam in Asia will be the major markets that the company will push into.

As for the company's branding business, the company is set to enter the US market with its Genius mice and will sell them mainly through special channels such as online shopping.

Optical products are another business that KYE will be focusing on expanding in 2011, the company shipped about one million OEM digital video camcorders in 2010 and is set to increase the shipments in 2011, while the company will also focus on boosting ASPs to increase the revenue share of the digital video camcorder business from 16% in 2010 to over 30%.

As for Japan's earthquake, since KYE only has a small portion of revenues coming from Japan, the company will not be affected significantly; however, the company might be affected if its system clients delay their orders due to component shortages, the company pointed out.