Local motherboard production and profits up in first quarter

The China Post staff

Large motherboard manufacturers’ first quarter 2001 profit reports were unusually rosy thanks in large part to improvements in overseas markets.

According to local mass media, Elitegroup Computer Systems’ (ECS) performance surpassed market expectations with a pretax net profit of NT$6 per share. There is also expectation that Asustek Computer Inc., Gigabyte Technology and Micro-Star International (MSI) will all have earnings per share (EPS) falling roughly between NT$2.5 and NT$3. First quarter market performance was benefited by an upswing in the European market. Overall, profit margins were higher in the clone market. Adding to that, the performance of the computer central processing system sector has also risen leading the profit margins of all the top motherboard makers to jump higher in the first quarter, by roughly 15 to 20 percent. As reflected in manufacturers profits, the computer motherboard industry did unusually well in the first quarter of this year, uncharacteristic for the industry where first quarter profits tend to be the laggards for any given year with profits generally picking up later on. Institutional investors originally anticipated that first quarter pretax profits at ECS this year would have an EPS of between NT$4 and NT$5, and were therefore surprised to see the NT$6 level surpassed. Even when the tax is taken into account, ECS’ first quarter EPS could very well reach the NT$4 level, indicated reports. On the other hand, differences between Asustek, Gigabyte Technology, and MSI have gradually been reduced. In terms of production and profits, Asustek far exceeded the others. But, its capitalization is much larger than those of others, it needs to earn NT$4.7 billion in pretax profits to be able to preserve a pre-tax EPS at NT$3.

Reports have indicated that Asustek officials estimated that its pre-tax EPS to be between NT$2.5 and NT$3. MSI in March has drastically increased production of motherboards with monthly production hitting historical highs for a couple of months. Additionally, in terms of first quarter results, Clone orders also rose, with January’s profit margin rate at about 17 percent, and the February and March profit margin rates increasing to roughly 15 or 16 percent, but the pre-tax EPS for the first quarter still remains NT$2.5 or so.

The Chinese-language Commercial Times indicated that small and medium sized motherboard manufacturers are reporting respectable profit results. ABIT Computer Corp. reported pretax earnings of NT$2.5 billion, with a net profit margin of 20 percent or so.