Quanta Computer Sees Revenue Boost from Vista -- PC Hardware Rebound in Sight?

Includes: DELL, HPQ, MSFT
by: Judith Levy

World-leading laptop manufacturer Quanta Computer forecasts revenue growth of 25-50% this year, due in part to the launch of Microsoft's Vista OS, said Quanta President Michael Wang in an interview. Quanta has already noted strengthening sales momentum this quarter. The company supplies nine of the ten leading PC vendors in the world and produced over a quarter of the world's laptops last year. Wang expects that figure to rise to 30% in 2007. The company's unconsolidated revenue, excluding some subsidiary revenue, rose 14% last year to 461.52 billion New Taiwan dollars (US$13.99 billion) from NT$403.10 billion in 2005. Wang sees revenue this quarter up 40% from a year ago. Significantly, he also forecasts revenue to approximately match that of the last three months of 2006, despite the fact that Q1 is almost always the company's low season. Although Quanta's profit margins are under consistent pressure from customers hoping to play manufacturers against one another, Wang says they have stabilized. Quanta keeps prices down in various ways, including making components in-house. Still, the company refuses to participate in bidding wars to win customers. Says Wang: "We will not be, and we don't want to be, the price leader."

Sources: Wall Street Journal
Commentary: 10 Reasons Why Microsoft's Vista Has Missed The MarkMicrosoft: Street Still Too Optimistic on Vista RevenuesDon't Sell on Microsoft Vista's Poor Reception
Stocks/ETFs to watch: Quanta Computer Inc. [TPE:2382], Dell (NASDAQ:DELL), HP (NYSE:HPQ), Microsoft Inc. (NASDAQ:MSFT). Competitors: Oracle Corp. (NASDAQ:ORCL), International Business Machines Corp. (NYSE:IBM). ETFs: iShares Goldman Sachs Software Index Fund (NYSEARCA:IGV), Software HOLDRS Trust ETF (NYSE:SWH), PowerShares Dynamic Software (NYSEARCA:PSJ)
Conference call transcripts: Microsoft F2Q07 (Qtr End 12/31/06)

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