Asustek Eee PC, motherboard shipments hit by downturn

Asustek joined Intel and Lenovo in announcing a worse view of the fourth quarter.

Asustek Computer, the world's largest motherboard maker and developer of the popular Eee PC line of netbooks, slashed its fourth quarter shipment outlook on Thursday, citing slower than expected demand for its products.

The announcement comes just a day after chip giant Intel and PC vendor Lenovo made similar downgrades to their fourth quarter views and shows how global financial woes are hurting the PC industry.

Asustek said its motherboard shipments likely fell 20 percent in the October to December period, down from a previous estimate of a 10 percent decline in the quarter. Motherboards go into every PC made. They're the circuit boards that connect all of the chips and other components inside a computer.

Sales of Asustek's Eee PCs also suffered in the fourth quarter. The company revised down its shipment target for the netbooks to 1.4 million to 1.5 million from a previous estimate of 1.6 million to 1.8 million.

Analysts had earlier said netbooks may be immune to the downturn due to their low prices, but Asustek's announcement trumps that message.

Sales of notebook PCs carrying the Asustek name also fell short of previous guidance. Asustek's laptop shipments will likely come in at between 1.5 million and 1.6 million units, down from prior guidance of 1.7 million to 1.9 million units.

The company now expects its financial results for the full year 2008 to be lower than expected, it said in a statement.

The company blamed a worse than expected slowdown in laptop sales for much of its woes, but also said it was caught holding high inventories of laptop and monitor components. Changes in global currency exchange rates have also hurt, as has a poor pricing strategy, Asustek said.

Asustek plans to review its workforce for possible cuts and look elsewhere in the company for ways to reduce costs, including lowering inventory levels.

On Wednesday, Intel revised down its fourth quarter revenue estimates to a worse than expected US$8.2 billion, down 20 percent from the previous quarter. The world's largest chip maker also said it will take higher than expected losses on certain investments, including a write-down of its investment in WiMax operator Clearwire.

PC vendor Lenovo also on Wednesday outlined plans to restructure its business in the face of the downturn, including laying off 2,500 workers, slashing executive salaries and taking a US$150 million restructuring charge.

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Dan Nystedt

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