Notebook Downturn: Mitac suffers falling margins in 1Q
After posting a revenue drop in the first quarter, Mitac Technology admitted that a downturn in the notebook industry has dragged down its gross margin significantly. The delayed launch of the Windows Vista operating system (OS) and more aggressive competition between Intel and AMD over pricing and platform transition strategies have made maintaining good margins a major issue for Taiwan?s notebook manufacturers in 2006
Mitac generated a gross margin of 5.2% in the first quarter of 2006, down from an average of 8.6% in 2005. Tsai attributed the decrease to a notebook inventory pile-up in Europe, as well as increase competition from international brands that are squeezing its share in the clone market. Mitac shipped 1.59 million notebooks in 2005, with 50% going to the clone notebook market in Europe. Despite the pressure from leading brands, Mitac projects its notebook shipments will grow 15-20% this year.
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