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Updated Monday, February 6, 2012 11:56 am TWN, CNA

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Barclays warns notebook shipment target too high for '12

TAIPEI -- Barclays Capital has warned that major contract laptop makers remain too optimistic about their shipment targets for 2012 despite stronger demand in the second half of this year.

These Taiwanese original design manufacturers (ODMs), including top-tier Quanta Computer Inc., Compal Electronics Inc., Wistron Corp., Inventec Corp. and Pegatron Corp., shipped 167 million notebook computers in 2011, Barclays' analysts recently reported in a research note.

The figure was 17-percent lower than their originally projected target of 202 million units, leading to a year-on-year decrease of two percent in total notebook shipments, the bank said.

For 2012, the Taiwanese notebook ODMs are again calling for an unrealistic shipment growth of 11 percent year-on-year, much higher than Barclays' global notebook forecast of only a 3-percent increase, said Kirk Yang, head of Asia ex-Japan tech hardware research based at Barclays Bank, Hong Kong.

“Even with expectations of hard disk drive supplies returning to normal in the second quarter of 2012 and the demand in the second half picking up along with the adoption of Ultrabooks, we believe the Taiwan ODMs are too optimistic,” Yang wrote in the note.

“With the overly aggressive targets for 2012 from ODMs and recent share price runs, we prefer to avoid notebook ODM stocks, as shipments in the first quarter of 2012 will likely remain weak and ODM margins may continue to disappoint the market,” he said.

Barclays has cut its January notebook shipment forecast to a 12-percent decrease month-on-month from the previous forecast of a 10-percent decline, citing a lack of Lunar New Year demand in China, weak PC demand in the United States and Europe, and shortages of hard disk drives.

Further, the bank said it did not see any meaningful replenishment of inventory after the holiday period, resulting in Barclays maintaining its forecast for first-quarter notebook shipments of a 14-percent decline over the previous quarter, lower than the normal seasonality of dropping 9 percent.

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