Reuters - Asustek aims to be No.3 laptop vendor in 2011

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Asustek aims to be No.3 laptop vendor in 2011

Tuesday, May 26, 2009 1:1PM UTC

By Kelvin Soh

TAIPEI (Reuters) - Netbook PC pioneer Asustek aims to double its market share to become the world's No.3 laptop vendor, riding the rising popularity of low-cost laptops among budget-conscious consumers during the global downturn.

Asustek is currently No.5 in the world; Acer and Hewlett-Packard occupy the first and second positions.

Asustek pioneered the wildly successful low-cost netbook PC in 2007, but has been gradually losing market share as other brands enter the market, and as it grapples with a reorganization following its fourth-quarter loss last year.

Asustek will be introducing five new laptop models based on Intel's consumer ultra-low voltage chip (CULV) this year, as part of its strategy to grow its share of the market.

"We call it the three-three policy, to be ranked third by market share in 2011," Asustek Chief Executive Jerry Shen told Reuters in an interview at the company's headquarters on Tuesday.

"Our current market share is about 5 percent, and it would have to be about 10 percent to become number three."

Shen gave a similarly bullish outlook for the company's prospects in China, where he said he expected to be on par with second-ranked Hewlett-Packard by market share in 2010.

"We don't think Asustek can take first place in China, but to be on equal footing with the current No.2 player should be possible next year in the laptop PC segment," Shen said.

Asustek and crosstown rival Acer now share fifth place in China by market share, according to research firm IDC. Both companies were included in a list of approved brands under a Chinese stimulus package that allows them to sell computers on the mainland.

The two Taiwanese rivals had previously faced considerable headwinds competing in China, which is dominated by home-grown brands such as Lenovo and Founder.

U.S. SURGES, EUROPE FLAT

Shipments to the United States have increased multi-fold because of the growing popularity of the company's Eee PC line of netbook PCs.

Demand in Europe, which provides the largest share of the company's revenue, is sluggish, as consumers cut back on their spending.

"In the United States, we're shipping as many computers monthly as we used to annually," said Shen, who became Asustek's CEO last year. "But Europe isn't growing at all."

Asustek is in the midst of a reorganization following its fourth-quarter loss in 2008, which it blamed largely on inventory write-offs and foreign-exchange related losses.

Shen said the company would implement a new policy from 2010 where employees who are placed in the worst-performing 5 percent for two straight years will be asked to go, as part of the company's efforts to streamline operations.

"The number will be higher than 5 percent this year because of the changes we are making internally, but that's what we're looking at from next year onwards," Shen said, but declined to elaborate on how many staff would be laid off this year.

Shen repeated the company's previous comments that it should be able to turn in an operating profit in the third quarter, saying it had implemented the necessary measures to return to profitability.

"It's actually a very conservative forecast, and in situations like this, it's better to be conservative and be able to meet the forecast than bullish and miss it," he said.

The company announced a surprise first-quarter profit late last month despite an operating loss, largely due to earnings at its fully-owned subsidiaries and one-time foreign-exchange related gains.

(Additional reporting by Roger Tung; Editing by Rupert Winchester)