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Asustek shares plunge amid worries over Q4 losses

2018/12/14 15:31:10

Taipei, Dec. 14 (CNA) Shares in Taiwan-based PC brand Asustek Computer Inc. came under heavy pressure, falling more than 2 percent Friday, amid rising concerns the company will incur a loss in the fourth quarter after deciding to book massive one-time costs in the quarter, dealers said.

The selling of Asustek shares also reflected cautious sentiment over a management reshuffle announced on Thursday after Chief Executive Officer Jerry Shen (沈振來) said he will step down, they said.

Asustek shares fell 2.82 percent to close at NT$207.00 (US$6.71) with 2.35 million shares changing hands on the Taiwan Stock Exchange Friday, with the benchmark weighted index ending down 0.86 percent, at 9,774.16 points.

"The big one-time costs scared many investors, who simply used the news as an excuse to cut their holdings and keep as much cash as possible as the year draws to a close," Mega International Investment Services Corp. analyst Kerry Huang said.

The stock encountered heavy selling soon after the local equity market opened, with investors shocked by an announcement made a day earlier, in which the company said it will book about NT$6.2 billion in one-time expenses, including losses resulting from inventories, amortization of advance royalties and costs from business reorganization in the fourth quarter.

The costs are expected to knock down Asustek's earnings per share by about NT$8, which could plunge the company into negative territory in the October-December period, it said.

"Asustek's smartphone division remains in the red amid escalating competition from Chinese brands, which served as one of the reasons the company could incur losses in the fourth quarter," Huang said.

Asustek is a Taiwanese PC company that entered the mid-range smartphone market in a bid to counter a slowdown in the global PC market.

Before the announcement, the market had expected Asustek to post NT$13.66 in earnings per share for 2018. However, the massive expenses could drag down the 2018 EPS to less than NT$6, the lowest level since 2010.

Despite possible losses for the fourth quarter sending the 2018 EPS lower, Asustek Chief Financial Officer Nick Wu (吳長榮) said at a news conference held Thursday that the company still plans to issue a NT$15 cash dividend per share this year.

Wu said Asustek's net worth was still about NT$170 billion, with cash and cash equivalents hitting NT$60 billion. Wu added Asustek remains financially healthy.

As part of the management reshuffle announced Thursday, S.Y. Hsu (許先越) and Samson Hu (胡書賓) will become Austek's joint CEOs beginning Jan. 1, 2019, as the board agreed to adopt a dual leadership mechanism. Both will help the company venture into the AIoT (AI + IoT) business.

"Judging from today's share price, I think many investors prefer to take a wait and see attitude toward the reshuffle until the new management starts to deliver," Huang said.

(By Jeffrey Wu and Frances Huang)
Enditem/AW