D-Link 2005 Annual Report Download - page 4

Le er To Shareholders,
Customers, Partners &
Employees
2005 has been an impressive year as D-Link successfully crossed an important
milestone in this industry: US$1 billion in revenue. This performance was
a result of our organization’s aggressive push forward into lucrative, high-
potential, emerging markets like Eastern Europe, Latin America and South
East Asia via strong local partnerships, further enhancement of our already
strong brand equity and our unyielding pursuit of innovation in our products
and services. This dynamic, global-oriented approach to growth and solid
customer service has translated into a milestone revenue achievement and
further proves our long-time philosophy that when you take care of the
customer, the customer will take care of you.
“Technology expertise, market forecasting and product breadth give
D-Link strength to aggressively compete with quality hardware at an
aff ordable price point in a variety of markets”
-Ken Kao
Financial Highlights
Across the board, all fi nancial metrics were healthy. Most notably, revenues in
2005 topped US$1.132 billion, representing a 17.1% (or 12.8% in Taiwan Dollar
terms) increase over the previous year. Net income was down, however, from
US$77.9 million in 2004, to US$50.8 million in 2005. This decrease is primarily
a ributed to the absence of a signifi cant one-time gain of share disposal
following the 2004 IPO of one of our manufacturing subsidiaries, as well as
relatively high operating and tax expenses. Despite continued challenges
inherent in mature, competitive retail markets such as North America and
Western Europe, it seems clear that the foundations we are laying in new,
emerging markets have begun to pay off and point to a more bountiful
harvest in years to come.
Global Presence
As D-Link celebrates its 20th anniversary in 2006, we have many reasons to
be optimistic, from our new state-of-the-art headquarters in Taipei, Taiwan to
strong partnerships in key new markets with opportunities for growth at every
turn. Revenues from emerging markets, such as Russia, Asia Pacifi c, Middle
East, Latin America and elsewhere in the world, rose 27%. Even relatively
mature markets such as North America and Europe were both up 11%. While
we are realistic about the challenges facing further expansion in saturated
markets, we remain very optimistic about economic and infrastructure
expansion in emerging markets that will translate into strong demand for our
GigE Switches, xDSL, VoIP and Digital Home products. As such, we expect
to see double-digit growth in these exciting economies going forward, as well
as continued growth in North America and Europe in the small-to-medium
business (SMB) sector.
In terms of product categories, sales in WLAN products saw a 19% rise in
2005, and represented our leading product group, accounting for 33% of total
revenue. Sales of Broadband products, which represent 28% of sales, climbed
16%, while Switches, which represent 24% of sales, grew 10%, and Digital
Home products, which represent 10% of sales, rose 26%.
Ken Kao
Chairman and
Chief Executive Offi cer
D-Link Group
2 D-Link 2005 Annual Report
(U.S. Dollars in Thousands)
2002 2003 2004 2005
Net Sales
$584
$728
$967
$1,132
$510
2001