ASUS who are attempting to get into the Smartphone phone market via a partnership with US Company Garmin are facing big problems according to Investment Bank Goldman Sachs who says that the Company has a a massive stockpile of notebooks, motherboards and graphic cards which they are struggling to shift.
Yesterday ASUS and Garmin announced that they intend to design, manufacture, and distribute co-branded phones under the Nuvifone brand. The original Nuvifone, which was announced more than a year ago, has yet to be released, but it will be rebranded as the Nuvifone G60.
The news comes as the Company struggles to shift a “mountain” of inventory spanning notebooks, motherboards, graphic cards. At the recent CES show Asus CEO Jonney Shih was embarrased when executives from Asustek Computer were unable to get their new Windows 7 touchscreen on their latest eeetok notebook to work. He later confessed that the Company was struggling to work around Apple “touch” screen patents.
Last week Asustek Computer said plans to reduce its current stockpiled of inventory, worth more than $1.6B before the end of the first quarter with some insiders tipping massive discounting on global markets.
Asustek’s LCD monitor inventory at the end of last year was worth around NT$6 billion. The company estimated this would cause losses of around 20%, equivalent to NT$1.2 billion, for the fourth quarter last year due to depreciation, the paper noted.
The company also plans to reduce its motherboard and graphics card inventory levels to 8-10 weeks in the first quarter this year, while the level for completed PC systems will be even lower. The company will reduce its operating costs by 10%, and will execute new strategies to face exchange rate fluctuations and flexible quotes, the paper added.
According to a recent Goldman Sachs’ report the Company has large accounts receivable debts which are at risk of becoming bad debts. The company is overloaded with inventory and channel partners in Countries like Australia, Eastern Europe, Russia and the Middle East have been impacted by overstocked notebook and netbook inventory, and are unable to take on any more stock.