Asus slashes inventory stockpiles

Asus has an inventory worth up to £936m, which is depreciating fast

Asustek Computer, maker of the Eee PC range, will reportedly slash its stockpiled inventory, currently worth NT$40bn to NT$45bn (£832m to £936m), to £624.42m to £728.46m by the end of the first quarter of 2009.

Chinese language newspaper Apply Daily reported that Asus is taking the action following concerns over product depreciation, which is apparently causing significant financial losses for the firm.

For example, Asustek's LCD monitor inventory, reported to be worth an estimated NT$6bn (£125m) at the end of 2008, has now depreciated to such an extent that the firm believes the stockpiles will amount to losses of around 20 per cent, or some £24.98m, according to the paper.

Apply Daily also reported that Asus was planning to cut back on its motherboard and graphics card inventory stockpiles to levels equaling just eight to 10 weeks' supply for the first quarter of 2008, and that stockpiles of full PC systems will hit even lower inventory levels.

In 2008, Asus fell short of its five million netbook shipment goal, managing to ship only 4.9 million, with actual sales reportedly reaching only 4.5 million units.

The firm hopes that cutting back on inventory levels will allow it to reduce operating costs by about 10 per cent, a necessary step for the firm in the current financial climate.

Asus has been hit hard by fluctuating exchange rates and flexible quotes, according to Apply Daily.