Quanta Plans IPhone
Quanta Plans IPhone-Like Computer to Maintain Growth (Update2) January 19, 2010, 5:29 AM EST
(Adds new China production capacity in eighth paragraph.)
By Tim Culpan
Jan. 19 (Bloomberg) — Quanta Computer Inc., the world’s second-largest maker of laptops by shipments, is developing an iPhone-style computer and seeks more strategic investments following record profit last year, Chairman Barry Lam said.
“We are looking for joint ventures with some companies that are already successful in the market — if they need some financial investment — as a strategic partner,” Lam, 60, founder of the Taoyuan, Taiwan-based company said yesterday in an interview in Taipei, declining to name targets. The company is also planning to make “a computer in an iPhone form factor” to meet demand for connectable devices.
Quanta, which supplies Apple Inc. and Hewlett-Packard Co., dropped to second place by shipments last year after Taipei- based rival Compal Electronics Inc. sold more low-cost notebooks amid the global recession. Shipments this year will surpass an earlier forecast for 40 percent growth after customer feedback at the Consumer Electronics Shows in Las Vegas this month showed demand is very strong, Lam said.
The company isn’t in talks for mergers or ventures with Hon Hai Precision Industry Co., Lam said. Hon Hai, based in Taipei, plans to buy Quanta’s laptop unit, the United Evening News reported Dec. 7, without saying where it got the information.
Hon Hai
“I don’t want to talk to Hon Hai for 10 years,” Lam said. “I am still making notebooks, I am still in manufacturing, I don’t need them.”
Hon Hai, the world’s largest contract electronics manufacturer, makes Apple’s iPhones and iPods and has moved into producing notebook computers on contract as well as its own Foxconn brand. Hon Hai fell 1.7 percent as of 12:24 p.m. in Taipei, while the benchmark Taiex declined 1.2 percent.
“Quanta needs to prepare for competition from Hon Hai, so they have to make strategic investments,” said Calvin Huang, who rates Quanta “buy” at Daiwa Securities Group in Taipei. “Eventually they will want to compete on cost.”
Chongqing, western China will be the site of a third production base as the company continues capacity expansion to meet demand, Quanta said in an exchange filing today.
Quanta shipped 35.9 million laptops last year while Compal sold 37.9 million units, according to data from both companies. Quanta gets about 75 percent of its revenue from notebook sales. The stock, which climbed 103 percent last year on the Taiwan Stock Exchange, trailing a 158 percent gain for its bigger rival, dropped 2.1 percent today.
“We made a very good profit, a record high profit last year,” Lam said, declining to provide details because the data hasn’t been released. “I look forward to another good year for notebooks.”
Quanta, which must report 2009 earnings before April 30, is expected to post a 6.4 percent rise in net income for the year to a record NT$21.5 billion ($677 million), according to the median of 26 analyst estimates compiled by Bloomberg.
Strategic Investments
Quanta paid $10 million for preferred shares in San Jose, California-based chip designer Tilera Corp. and $7.89 million for a stake in Kenseisha Shanghai PMP Co., a Shanghai-based maker of computer molds, it said in separate filings in October.
Cloud computing, where information and computing power are delivered over the Internet, will form the basis of Quanta’s future growth, spurring the company to develop a smaller mobile device, Lam said.
“We call it a handheld computer with an iPhone-size display and form factor,” he said. The device, which has yet to be manufactured or find any clients, will feature a 3.5-inch touch-screen display, voice calling and wireless Internet functionality, he said. He denied Quanta is a supplier of Apple’s iPhone or tablet computer.
ARM Holdings Plc and Qualcomm Inc. are among companies that will supply chips for the device, he said, without providing further information on the product.
–Editors: Suresh Seshadri, Jonathan Annells
To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.
To contact the editor responsible for this story: Jonathan Annells at jannells@bloomberg.net.
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