Asustek 2010 earnings signal notebook strength

The Taiwanese manufacturer looks to tablets and emerging markets for growth in 2011

Asustek Computer's revenue for 2010 grew 29 percent over the previous year, largely on the strength of traditional laptop computer sales, the world's sixth-largest PC maker said on Friday.

The Taiwanese company hopes tablet PCs, barely a blip in its books last year, will make a bigger mark in 2011, while netbook computers are expected to hold at current sales levels.

Full-year net revenue grew to NT$321.3 billion (US$11 billion) and net income rose 32 percent to NT$16.5 billion.

Netbooks, the lightweight laptops championed in Taiwan over the past two years, accounted for 16 percent of last year's revenue and the heavier but sturdier traditional notebook computers 56 percent, the company said. The bigger devices helped drive 2010 revenue growth, particularly in Asia Pacific, CEO Jerry Shen said.

In future the company plans to target consumers in emerging economies such as Brazil, India and Mexico, after watching China and the Asia-Pacific region do well in 2010. "We hope we can expand those channels to achieve a double-digit growth," CFO David Chang told investors.

Netbook sales will hold at about 6 million units in 2011, the same as last year, according to a company forecast, while sales of larger laptops should reach 14 million, up from 10.9 million last year.

But tablet PC models such as the Eee Pad Slider that were unveiled last month at the Computer Electronics Show in Las Vegas dominated the investor conference sidelines as the company looks to them for some of its 2011 growth.

Asustek expects to sell 1.5 million to 2 million tablets in 2011, controlling about 10 percent of the infant but highly competitive non-iPad tablet market.

Asustek and Taiwanese rival Acer, the world's second-largest PC maker, should expect consumers in emerging markets to prefer netbooks to the more expensive tablets, said Tracy Tsai, principal analyst with Gartner Inc in Taipei.

Tablets would do well in Europe, where consumers can afford the thousands of dollars per unit, Tsai said. Gartner forecasts an overall increase in tablet sales this year to 64 million units, compared to 20 million in 2010, with netbook sales flat.

"You'll find the focus on netbooks declining, but not every company is the same," Tsai said. "Asus and Acer have said they have new netbooks are coming out. They're not giving up."

Asustek said on Friday the recall of Intel's Sandy Bridge chipsets had cramped forecasts for first-quarter 2011 shipments. Notebook shipments will decline to 2.8 million units from 2.9 million in the third quarter of last year and 3.1 million in the fourth quarter.

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