Lite-On IT: New optical drive lines to contribute 40% of 2003 revenues

Tuesday 29 April 2003

Lite-On IT: New optical drive lines to contribute 40% of 2003 revenues
Jimmy Hsu, Taipei; Richard So,

At its April 28 first-quarter investors conference, Lite-On IT forecast that “new” products such as combo, slim combo and DVD+RW drives and DVRs (digital video recorders) will contribute about 40% of its full-year revenues. CD-ROM, DVD-ROM and CD-RW drives contributed 97% of the company’s first-quarter revenues.

The company reported shipping 9.56 million optical drives in the first quarter and forecast second-quarter shipments would remain about the same. Lite-On IT expects healthy second-quarter revenues of NT$10 billion, despite the traditional low season.

Lite-On IT also said that its gross margin could rise to 26-27% in the second quarter from 25% in the first quarter. Currently, the company commands about a 32% gross margin on “new” products and about 25.5% on “old” products. It expects material costs to fall around 2-3%. It also optimistically expects to gradually lower costs by 10-15% through business process improvement (BPI). The company noted that the decline in optical drive ASPs (average sales prices) is slowing.

Finally, Lite-On IT said that in response to SARS concerns, it has taken measures such as increasing raw material inventories by two weeks and controlling employee time-off. The company has 55 days of finished product inventories. If SARS affects shipments, Lite-On IT said it would not rule out shipping by air or beginning production in other parts of the world, such as Mexico and Malaysia.