Although forecasting no revenue growth for this year, Shuttle maintains that quitting the motherboard business has reduced margin pressure from its business and allow the company to enjoy increased profits, according to company product marketing vice president Jonathan Yi.
However, Shuttle is currently feeling the short-term effects of not having motherboards contribute to its sales. Over the first two months of this year, the company’s revenues are down 40% on year, and revenues for 2005 should stay flat at about NT$7 billion.
Yi indicated that the company shipped about one million motherboards last year, with the business contributing NT$2 billion to the company’s revenues, or about 30% of its total sales.
However, Yi estimates that by removing itself from the highly competitive motherboard business, Shuttle will be able to focus on its successful small-form-factor (SFF) PC business and be able to maintain margins of over 15%.
Shuttle was one of only five Taiwan-based motherboard vendor to record gross margins over 10% in the third quarter of last year, and only Asustek and DFI had margins over 15%. In addition, gross margins have been steadily declining for motherboard vendors over the past few years, except for companies that have managed to target niche markets, a source in the market stated.