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Quanta is Optimistic About the Future, But Takes a Hit This Quarter on FOREX

Taiwan’s biggest ODM had a flat quarter, but expects things to pick up going forward into the next quarter.

Quanta counts the who’s-who of PC manufacturers as its clients, including Hewlett Packard, Asus, and Apple.

Quanta Computer posted second quarter profit of $135.69 million, which was slightly lower than what analysts expected. During the same quarter last year profit came in at $134 million. Sequentially, Quanta’s profit increased 49% from the previous quarter’s income of $96.5 million.

However, Quanta did take a hit on foreign exchange rates due to a relatively strong New Taiwan Dollar compared to the US dollar. The company reported that approximately $2 million (61 million NTD) was erased from its earnings due to a foreign exchange rate loss. However, in the previous quarter the opposite occurred with the company posting a $40 million gain (1.22 billion NTD) because of favorable exchange rates.

For the next quarter, Quanta expects to ship 5-7% more laptops and 10% more PCs.

“We’re seeing the trend of industrial PC replacement in tandem with the increased popularity of new types of consumer-based PCs” such as laptops with detachable keyboards,” Quanta President and Vice-Chairman C. C. Leung said during a press conference after the earnings. “The second half is set to be a better period than the first half. A reduction in prices and PC replacement demand are set to help stimulate sales.”

Quanta also reported that gross margin climbed to an all-time high of 4.93% as the company diversifies into “post-PC” fortunes such as building servers for Facebook as well as doing the bulk of manufacturing for Apple’s upcoming iWatch.