inventec appliances corporation
TRANSCRIPT
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Inventec Appliances Corporation
March 2010
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Innovating Customer Value
Agenda
Company Overview
Business Models & Competence
Financial Performance
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Company Overview
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Innovating Customer Value
Company SnapshotEstablished in May-2000
Headquarter Wugu, Taipei Taiwan
Production facilities Taipei, Pudong, Jiangning, Dallas
Capital NT$5,120 millions
Market capitalization(1) NT$14.9 billions / US$465 millions
Businesses ODM business (85% of 2009 rev) : Smart handheld andnetworking appliancesOBM business (15% of 2009 rev): OKWAP handset
Employees 12,201
Major shareholders Inventec Corp. (44%)
Management & employees (7%)
Products
Graphing Calculator, Personal Digital Assistant (PDA),Smartphone, MP3 Player, Personal Navigation Device(PND), PHS/GSM/3G/3.5G mobile handset, IP phone,Data Card, POS terminal device
2008 Revenues US$ 1.5 billions
Note: Data as of March 8th, 2010
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Innovating Customer Value
5IAC Confidential
• Main Frame System forProfessional Areas
• Consumer Electronics
• Personal Computer Environment
• Office Productivity
• Communication and Networking Society
• Productivity Enhancement
•Personal Integrated Devices
• Life-Style and Quality
IAC Key Milestones
Sales Revenue
(US$)
1980 1990 2000 2010
100M1975• Start up for Calculator OEM
1985• Start Telephone OEM
1988• Start Notebook PC OEM• Start Malaysia Operation
1989• Start Bilingual DictionaryOwn Brand Distribution
1991• Start China Operation
1993• Start PDA Business
1997• IPO of IEC
1999• Reorganization forYear 2000
• Start Server Business• Start IA Business
1B
10B
2001• Start multi-media Business
2004• Start GPS business
2000• IAC founded• First OKWAP phone shipped
Pre-IAC Stage
2005• IPO of IAC2003
• OKWAP GSM Phone hit 10% market share in Taiwan
2002• Start networking business
2006 / 2007/ 2008• OKWAP PHS Phone
market share #1 in China
2008• Start IPDS Model
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Innovating Customer Value
Product Range and Technology Platform : Smart Handhelds and Network Appliances
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Innovating Customer Value
Smart Handheld:Wireless, Multimedia, Broadband, Broadcasting and Location
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Innovating Customer Value
Network Appliances:VoIP, Multi-Mode and Network Service Integration
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Innovating Customer Value
Employees and Engineering Resources
Pudong62%
Shanghai2%
Taipei6%
Jiangning21%
Xi’an1%
Nanchang1%
OKWAP7%
Employee by location: Engineering breakdown:
Total no. of employee: 12,201
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Innovating Customer Value
Global Operations( 12 Cities, 3 Facilities, 12,000+ Employees, 2,100+ Engineers )
Shanghai-Pudong(103,500 m sq.)
Taipei(Headquarter)
Nanjing-Jiangning(65,000 m sq. )
Dallas (hub)(7,432 m sq. )
Taipei(Headquarter)
Shanghai
Beijing
NanjingDallas
Guangzhou
• Taipei• Shanghai• Nanjing• Beijing• Guangzhou
Silicon Valley
OKWAP Operations ( )
Engineering Centers :Shanghai / Nanchang / Xi’an / Shenzhen / BeijingOverseas Operations and Liaison Offices :
Dallas (hub) / Silicon Valley / Dehli / Tokyo
HH, 2 Main Facilities & 1 Hub
Dehli
Xian
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Business Models & Competence
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Innovating Customer Value
12IAC Confidential
Business Models
Resource Pool• Technology and Platform• Talent and Skill
Product Pool• Smart Handhelds• Network Appliances
IPDSIntegrated Product Design Service-- efficient technology deployment
IODMIntegrated Original Design Manufacturing
-- economic scale manufacturing
COBMCommunity & Own Brand Marketing
-- branding effects & values
Products
Services
Products+
Services
Global Customers
Global Customers
Greater China
End Users’Experiences
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Innovating Customer Value
IPDS
Integrated Product Design Service (IPDS)
13IAC Confidential
IAC Knowledge Database: Innovations/IPs/Knowhow
Customer Requirements
IDC R&D Resources:Shanghai/Nanchang/Xi’an
IT Environment: Efficient/Secured/Flexible
Processes:CMMI/PLM
• Software Modules• Software Packages• Prototype Samples• Engineering Samples• Mass Producible
Products
• SW/HW testing• SIT Reports• Pre-Test Reports• Field Trail Logs
Product Design Service• Application Development & Maintenance• Embedded System Solution• Hardware Development & Integration
Testing & Certification Service• System Integration Test (SIT)• Certification• Global Field Trial• Carrier Acceptance
Manufacturing Consulting• Planning• Testing• Factory Process Management• Assembly Technology
Design
Testing
Manufacturing
IPDS
• Facilities Plan• Manufacturing
Execution Systems• Equipment Plan• NPI Plan• Testing Tools
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Innovating Customer Value
14IAC Confidential
IODM ( Integrated ODM ) Model• Concurrent Product Development Management and Supply Chain Management• Best Utilization of Information System & Technology for Resources Integration• Time to Market, Time to Volume : Based on High Quality, High Efficiency and Low Cost
ProductDevelopment
Internet
LANGlobal WAN
• High Quality• High Efficiency• Low Cost
• Material• Machine• Method• Manpower• Morale
MaterialAdvancedSourcing
Mass Production
Planning
IACTaipei
ShanghaiNanjingDallas
• SAP/R3 Enterprise Resource Planning
• EISEnterprise Information System
• PLMProduct Lifecycle Management
Customers
End Users
Suppliers
Customers
WebAccess
EDI
Direct Ship
Logistics
RMA Service
Local Hub
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Innovating Customer Value
COBM:OKWAP Phone Products
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Innovating Customer Value
13,000 Selling Spots and 700+ Service Centers
Taipei
Beijing
* Taiwan : Over 4,000 retailers, and 4 direct service centers
* China : Over 9,000 selling spots, Over 700 contract service centersand 200 direct service centers
GuangZhou
ShanghaiNanjing
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Innovating Customer Value
OKWAP Service Centers Cross the Region
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Innovating Customer Value
OKWAP Brought Value to PHS Technology
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Innovating Customer Value
Dominated China PHS market with Share of 36%
Built solid and close relationship with carrier from customized and value-adding service
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Innovating Customer Value
OKWAP 2010 Strategy
Leverage close relationship with carriersCDMA/EVDO full spectrum product lineHigh-end GSM/WCDMA for niche demandTD-SCDMA with WM/Android platformCDMA market share reached 6% in 2009Aiming for 10% share in China CDMA market
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Innovating Customer Value
IAC Core Competence
21IAC Confidential
Resources Integration for Highest Total Efficiency• Customer Focus Team for Customer• Development , Supply Chain, Manufacturing and RMA Service Integration• One Stop, Total Solution
Access Terminal Expertise and Innovation• Full Line Technology in Smart Handhelds and Network Appliances• Plenty of Engineering Resources for Customer Value Creation• Leverage Technology Platform for Product Innovation
Product & Technology Customer
Orientation
SystemOperation
IODM Business Proficiency and User Experience• Specific Process Package Designed for Customer’s Convenience• Service, Speed, Flexibility for Customer’s Satisfaction• Field Knowledge and User’s Experience in Greater China
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Innovating Customer Value
Core Technology: Platform Integration & Access
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Innovating Customer Value
Corporate Evolution
* Customers’ code name in IAC.
Time /Items 2001 2008
Employees Total: 2,034 Total: 13,000+
Engineer: 576 Engineer:2,200+
Production Facilities
40,000 m2 216,700 m2
Major Customers * T- Bone, Psion, OKWAP Phone, Cidco
T- Bone, Pyramid, May, Trump, OKWAP, HW, Dragon, Venus, Navy
Product Ranges Graphic Calculator, PDA, GSM Phone, E-mail Terminal
Graphic Calculator, PDA, Smart Phone, MP3 Player, GPS Navigator, PHS Phone, GSM Phone, 3G Phone, VoIP Phone, Wireless Credit Card Reader, PC Data Modem Card
Owned-Brand Business
NT$ 1 Billion NT$ 7 Billion
Consolidated Revenue
NT$ 7 Billion NT$ 70 Billion
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Financial Performance
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Innovating Customer Value
Financial Performance
79
120
105
93
69
49.0
0
20
40
60
80
100
120
140
2004 2005 2006 2007 2008 2009
(NT$
bn)
2.1
3.0
2.1
3.2
2.2
0.04
0.310.08
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2004 2005 2006 2007 2008 1Q09 2Q09 3Q09(N
T$bn
)
Net Revenues Net profits
Source: CompanyNote: Numbers are on consolidated basis.
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Innovating Customer Value
Net Profit Margin Continued to Improve
9.5%
0.4%
7.3%8.5%
9.4%
8.1%
11.6%10.3% 10.6%
2.0%
0.3%
3.2%3.5%2.6% 2.5% 2.1%
2004 2005 2006 2007 2008 1Q09 2Q09 3Q09
Gross margin
Net margin
Gross margin and Net profit margin from 2004 to date
Source: Company, consolidated number
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Innovating Customer Value
Balance Sheet Management
Note: Peers included HTC, Compal Communication, Arima, Mitac, and Qisda.
Days inventoryA/R days
5157 59 56
49
6157
4953 55
0
10
20
30
40
50
60
70
2004 2005 2006 2007 2008
IAC Peers average
(Day
s)
21
32
39
3431
48
39
3335 36
0
10
20
30
40
50
60
2004 2005 2006 2007 2008
IAC Peers average
(Day
s)
IAC’s Working Capital Turnover Has Continued to Improve
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Innovating Customer Value
Strong Returns on Equity
Sales/Invested capital - 2008
7.58.5 9.0
7.5
2.73.7
4.4
5.9
3.93.1
0
2
4
6
8
10
2004 2005 2006 2007 2008
IAC Peers average(X
)
Note: Chart on the right hand side shows peers including HTC, Compal Communication, Arima, Mitac, and Qisda.
Return on Equity - 2008
48.8
22.519.3
16.4 15.8 14.6 13.911.1 10.2
1.4
-12.2-15.7(20)
(10)
0
10
20
30
40
50
60
HTCQua
ntaW
istron IA
CCom
pal
Foxco
nnInv
entec
Compa
l Com
.Asu
stek
Mitac
Qisda
Arima C
om.
(%)
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Innovating Customer Value
Condensed Income Statement
Source: Company
(NT$ millions) 2006 2007 2008 1Q09 2Q09 3Q09Net Sales 105,202 92,650 69,395 8,001 7,631 11,620
% YoY growth -12.4% -11.9% -25.1% -58.7% -61.2% -40.9%
Gross profit 7,657 9,542 7,337 648 888 1,105
% Margin 7.3% 10.3% 10.6% 8.1% 11.6% 9.5%
Operation profit 2,485 3,657 1,928 -176 -268 1
% Margin 2.4% 3.9% 2.8% -2.2% -3.5% 0.0%
Net profit 2,059 3,249 2,194 22 163 43
% Margin 2.0% 3.5% 3.2% 0.3% 2.1% 0.4%
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Innovating Customer Value
Condensed Balance Sheet
Source: Company
(NT$ millions) 2006 2007 2008 1Q09 2Q09 3Q09Cash 5,399 7,099 7,731 7,660 7,282 5,804Other Current Assets 24,368 22,888 9,236 8,440 8,433 15,810LT Investment 209 202 504 518 476 506Fixed Assets 6,828 6,701 6,589 6,652 6,302 6,015Total Assets 37,666 37,873 24,981 24,230 23,408 29,062
ST Debt 2,325 120 1,374 945 1,707 1,907Other Current Liabilities 23,176 23,595 9,057 8,485 8,987 14,544LT Debt 0 0 0 0 0 0Total Liabilities 26,362 24,565 11,589 10,542 11,336 17,073
Shareholders' Equity 11,304 13,308 13,392 13,688 12,073 11,989
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Thank You