Compal books first-ever quarterly loss, places hopes on mobiles

Reuters

* Q3 net loss totals $92.27 million due to one-time swap

* Core PC business revenue to be cut to 70 pct in 2014

* Smartphone, tablet revenue to be 20 percent in 2014

By Michael Gold

TAIPEI, Nov 13 (Reuters) - Taiwan's Compal Electronics Inc, the world's second-largest contract manufacturer ofnotebook PCs, posted its first-ever quarterly loss, but promisedan aggressive push next year into mobile devices like tabletsand smartphones to raise revenues.

The company, which recently nabbed orders for Apple's next-generation iPhone, according to supply-chainsources, said on Wednesday it suffered a third-quarter net lossof T$2.73 billion ($92.27 million), mainly due to a T$4.9billion one-time loss from a share swap by its telecom carrierarm Vibo with Taiwan Star in a divestment.

The company will start making Apple devices starting nextyear. It also makes computers for Acer Inc and LenovoGroup Ltd.

Tablets and smartphones will occupy a greater share of thecompany's revenue going forward, chief financial officer Gary Lutold analysts during an earnings conference.

The company plans to pare its core business of producingnotebook PCs from 82 percent of its revenue this quarter to 80percent in the fourth quarter and 70 percent in 2014.

Lu said he expects combined smartphones and tablet revenueto make up 20 percent of the company's revenue in 2014, withmore than 15 million tablets expected to ship next year, doublethis year's output.

In September, Compal Electronics announced it would buy theentirety of its subsidiary, handset maker Compal Communications, a move that analysts view as the main driver of thepush into mobile and next-generation devices from slow-growth,low-margin traditional PCs.

According to research firm IDC, global PCs sales fell nearly10 percent in the third quarter of 2013 from a year earlier.

"This is a necessary step for them," said Wanli Wang, ananalyst at CIMB Research in Taipei. "With consumer preferenceschanging the way they are, if they continue focusing onnotebooks, there isn't any new catalyst for growth."

Before the earnings announcement, the company's stock hadfallen 2.1 percent, versus a 1.1 percent fall for the broaderTaiwan market.

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