D-Link 2002 Annual Report Download - page 6

Dear D-Link Shareholders,
2002 was probably the most challenging year in recent memo-
ry for the data networking industry. In addition to the continu-
ing weakness in the global communication markets, most of
us had to pause and reflect on the way we conducted business
in order to ensure that we served our customers with the high-
est level of satisfaction and added value.
We are proud to say that we acted decisively to evolve from
being a pure Local Area Network equipment vendor to
become an integrated next generation communication solution
provider in the global small and medium enterprise (SME)
and home markets. Today, the Company is stronger than we
were a year ago. As we move forward, we will continue to
look for ways to further improve our business scope and com-
petitive edge to ensure that our strategies pay off well and
work towards the best of all shareholders' interests.
Solid Financial Results
In sharp contrast to the difficulties of 2002 was our solid
financial performance. The challenge we faced was to manage
through a time of extremely rapid change while ensuring we
had a smooth transition to the new business model which
integrated broadband, wireless, and home networking into the
legacy LAN business. Through it all, we delivered record
results and generated the type of growth that will help to sus-
tain our leading position in the future.
Thanks to the hard work of our 3,200 employees worldwide -
the unique, core asset of the Company - D-Link generated a
record globally consolidated sales of US$583 million
(NT$20,203 million) and a net earnings of US$25 million
(NT$868 million) despite increases in overseas subsidiary
expenses and a special write-off for the WLAN and cable
modem affiliates. Our revenue grew 17% while gross margin
grew 20%. We are one of the few data networking companies
that actually generated net operational cash in 2002, enabling
us to enter 2003 in a much better competitive position than
most others in the industry.
Few companies in the global communication industry would
be capable of registering this type of performance against the
backdrop of a troubled world economy and a drastic change
in demand, not to mention technology overhang. D-Link,
however, is at a distinct advantage in times like these. Our
diversity of products and geographies, combined with recur-
ring and predictable revenue streams, enabled us to absorb
shocks and weather downturn and, better yet, to thrive during
times of adversity.
Growth in All Areas
In 2002, despite the slowdown in the global economy, the
sluggish communications market, the war on terrorism, and a
series of corporate scandals, not only did our business gener-
ate outstanding results, but six of our ten key product cate-
gories also posted record sales.
Letter to Shareholders
Ken Kao
Chairman and CEO
D-Link Group
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