UPDATE 1-Asustek cuts shipment target on Europe fears

* Q2 net T$3.32 bln vs consensus forecast T$4.27 bln

* Sees Q3 portable PC shipments flat vs Q2

* Sees Q3 sales up 5-10 pct vs Q2; trims 2010 shipment target

* Stock up 4 pct before results
(Recasts with company quotes, analysts’ comments and details)

TAIPEI, Aug 13 (BestGrowthStock) – Netbook PC pioneer Asustek
(2357.TW: ) posted a weaker than expected second-quarter profit (Read more your timing to make a profit.)
and trimmed its laptop shipment forecast for this year as it sees
uncertainties ahead in European and U.S. markets.

Asustek Computer Inc said on Friday it expected combined
shipments of its regular notebook and low-cost netbook PCs to
reach 4.1 million units in the third quarter, versus 3.9 million
in the second quarter.

Asustek CFO David Chang said the company’s third-quarter
sales would rise 5-10 percent from the second quarter, while 2010
combined laptop shipments would reach 16-17 million units, lower
than an earlier estimate of 18 million units.

“Margins were not good in the second quarter and that’s
mainly because of the currency issue. It looks like demand is not
strong into the second half,” said Angela Hsiang, a technology
analyst at Taiwan’s KGI Securities.

“We used to see a sequential rise of 20 percent in its sales
in the third quarter, and you can see the growth this year is
worse than the past several years.”

Technology sales typically peak in the third quarter on to
back-to-school demand and pre-Christmas buying before slowing
into the fourth quarter.

“We encountered the debt problem in Europe in the second
quarter this year and we will still feel the pain in the third
quarter,” Asustek’s Chang told an investor conference.

Europe made up 39 percent of the firm’s total sales in the
second quarter, versus 41 percent for Asia.

“So far, three major markets are not doing well, so we are
conservative about the third quarter,” CEO Jerry Shen told the
same conference, referring to Europe, China and the United
States.

Asustek, which also produces motherboards and sells mobile
phones under its own name, made a net profit of T$3.32 billion
($104 million) in April-June, compared with a net loss of T$131
million a year ago when it was hit by foreign exchange losses.

The profit was down by a third from the first quarter of 2010
and fell short of a consensus forecast of T$4.27 billion by
Thomson Reuters I/B/E/S.

The results came after the Taipei stock market closed on
Friday. Asustek shares rose 4 percent, outpacing the main TAIEX
share index’s (.TWII: ) 0.8 percent gain.

Hit by worries over slower demand, the stock has fallen about
18 percent so far this year, versus the big board’s 4 percent
fall in the same period.

Earlier this week, Acer Inc (2353.TW: ) reported a 38 percent
fall in its sales in July, while Acer still expects its brand
revenue to grow 10-15 percent in the third quarter from the
second quarter. [ID:nTPV001845]

Asustek pioneered the low-cost netbook PC in 2007 but has
been rapidly losing market share as bigger rivals such as Acer,
global leader Hewlett-Packard Co (HPQ.N: ) and Dell Inc (DELL.O: )
entered the netbook sphere.

Pegatron Corp (4938.TW: ), the manufacturing unit of Asustek,
was spun off to avoid any conflict of interest in Asustek’s main
business of selling laptop PCs and its work making gadgets for
other brands.
(US$1=T$32)
(Reporting by Baker Li, Editing by Jonathan Hopfner)

UPDATE 1-Asustek cuts shipment target on Europe fears