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Shares of Pegatron plunge on cautious Q3 outlook

Shares of Pegatron plunge on cautious Q3 outlook

Taipei, June 28 (CNA) Shares of Pegatron Corp., one of Taiwan's leading contract notebook makers, took a beating in Thursday morning trade after the company gave a cautious outlook for the third quarter of this year, dealers said. An estimated 10 percent decline in notebook shipments for the July-September period from the previous quarter prompted institutional investors to cut their holdings in the stock, the dealers said. As of 11:23 a.m., shares of Pegatron had lost 3.93 percent, dropping to NT$39.15 (US$1.31) with 8.68 million shares changing hands, while the benchmark weighted index was up 0.14 percent at 7,192.89 points. "The cautious outlook scared off many investors this morning," Horizon Securities analyst Benson Huang said. "I suspect foreign institutional investors stood on the sell side," he added. In an annual general meeting held a day earlier, Pegatron said notebook shipments for the third quarter are expected to fall by about 10 percent from the second quarter as the industry will be in a transition period ahead of the launch of Microsoft's Windows 8 operating system. The company said the lingering debt problems in the eurozone continued to affect global demand, which has seen many high tech firms adopting a cautious attitude toward the market outlook. However, Pegatron said demand is expected to recover from the fourth quarter due to deferred demand after the launch of new models bundled with the Windows 8 operating system. "Although the company expects shipments in the fourth quarter to make a comeback, few can be sure market uncertainty will be removed simply due to the new product presence," Huang said, referring to the weakening demand amid the European financial crisis. Huang said investors should pay close attention to the upcoming earnings reporting season on Wall Street, in which major high tech firms in the U.S., such as Intel, IBM, Apple and Microsoft, will release their market outlooks and give more clues about global demand. "Many investors preferred to cut their holdings to avoid more losses caused by possible negative leads," Huang said. Foreign institutional investors sold a net worth of 790,900 Pegatron shares on the Taiwan Stock Exchange the previous day. "Foreign institutional investors still hold a big chunk of outstanding Pegatron shares, about 40 percent. I think they will continue to unload their holdings," Huang said. "I expect that Pegatron shares will experience more downward pressure over the next few sessions before moving to the nearest support level of around NT$37.00," he added. (By Frances Huang)


Updated : 2021-08-04 11:10 GMT+08:00