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Asustek shares plummet despite predictions

TAIPEI, Taiwan --Shares of Asustek Computer Inc. (華碩電腦) on Thursday nosedived by 7 percent due to concerns over earnings growth, despite Morgan Stanley and HSBC raising target prices for the company's shares.

Asustek yesterday opened down nearly 7 percent, the maximum daily fluctuations prescribed by local authorities, and stayed in the trough of NT$308.5 up until the market closed. Taiwan-based Asustek is now the world's fourth largest personal computer (PC) manufacturer.

Morgan Stanley and HSBC yesterday raised Asustek shares by 13.04 percent and 4.4 percent to NT$390 and NT$355 respectively; however, Goldman Sachs, CITI and Credit Suisse indicated that the company overestimated the contribution its smartphone business is going to make this year.

In a quarterly meeting with institutional investors held recently, Asustek Chief Executive Officer Jerry Shen (沈振來) predicted Asustek's smartphone shipments, led by Padfone and ZenFone, will hit 2 million in the first half of the year and run to 5-10 million at year-end.

Due to a low base period in 2014, Asustek expects to see its annual smartphone shipment post 100-percent growth in 2015. The 2016 smartphone shipment goal amounts to 40 million units, double what it sold a year earlier.

“Although Asustek is gearing up to sell smartphones, its strategy to win a larger share in the already competitive global market by selling lower-cost smartphones could hurt its profit margin,” MasterLink Securities analyst Tom Tang told the Central News Agency (CNA).

“It was no surprise that Asustek shares came under heavy pressure soon after the local market opened amid such earnings growth concerns,” Tang said.

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