HP suppliers’ fate hangs in balance

Jennifer Tan

SINGAPORE: Hewlett-Packard Co Ltd (HP) said on Monday that it will not

disclose its suppliers, dashing market hopes of identifying contract

manufacturers that will survive a cull by the US computer and printer maker. HP

said recently it planned to slash its suppliers from 20 to four, causing

uncertainty in the market over the status of firms such as Singapore's Venture

Manufacturing.

"We've never given anyone a list of our suppliers as it is company

policy not to do so, and I don't think the US side will do so either,"

Cecilia Pang, Asia-Pacific director of company communications, told Reuters.

Venture's stock has been hovering near six-week lows in recent sessions on

fears it could be one of the suppliers cut by HP, which accounts for about 20

percent of the Singapore contract manufacturer's revenues. Venture said last

week its partnership with HP remained intact but analysts noted its statement

said nothing about whether it would see any impact from the cuts.

"The market was expecting HP to identify their four suppliers and

clarify Venture's status, but it appears everyone is going to be disappointed

after all," said Samuel Wong, institutional dealing manager with Daiwa

Securities. Analysts said HP's decision to keep mum would heighten uncertainty

over Venture's prospects.

"There will be no quick resolution to the questions whether Venture will

remain as a supplier to HP on as strong a footing as before," said Gregory

Yap, head of research at OCBC Investment Research.

"While HP's decision will form a gag order on Venture's management in

terms of how much they can say to assure investors, I believe the company and

HP's other suppliers will get around that somehow through informal means and

indirect references."

Dharmo Soejanto, an analyst at Kim Eng Securities, said he expected Venture's

share price to remain under pressure in the near term. "I guess the only

thing we can do is to wait for Venture's results numbers six months later and

look through their major customer list for an idea whether they have lost the HP

contract," Soejanto said.

Analysts expect Venture to announce robust half-year net profit growth for

the six months to June 30 later on Monday but say weak global demand is likely

to hurt its showing compared with the second half of 2000.

(C) Reuters Limited 2001.