D-Link 2008 Annual Report Download - page 4

D-Link Annual Report 2008
03
Operating expenses of 28.6 percent of net revenue went up
from 27.4 percent in 2007 due to relatively higher expansion
expenses in emerging market countries in the rst half
of 2008 and the inclusion of NT$121 million in employee
bonuses which formerly had been an o-balance sheet
item. Operating prot and net margins decreased to 4 and
3.6 percent, respectively, from 2007 when they were 6.9 and
10 percent, due in large part to the global recession and
global currency uctuation resulting in prot margin erosion,
foreign exchange loss and absence of one-time disposal gain
of non-core holdings.
At the bottom line, we see EPS of NT$2.12 per share in 2008,
compared to NT$5.91 per share in 2007, based on the 2008
year-end capital of NT$5.652 billion.
This economic downturn was bigger than expected. No one
could foresee how fast the recession would adversely impact
market performance. However, D-Link’s previous growth
record, its nancial strength based on nearly a quarter century
of revenue and prot increases and its outstanding leadership
are the primary reasons why we have been able to cope with
the current conditions and remain optimistic that D-Link’s
revenues and prots will be able to promptly rebound better
than the industry average as the global economy gets back on
a normal track.
Localized Global Presence
I am proud to report that we truly have the world’s computer
networking needs covered with 2,477 employees serving
in 174 D-Link oces in 71 countries in 13 strategic global
locations.
Emerging Markets and Asia Pacic
Let’s start with our Emerging and Asia Pacic markets where
a majority of our revenue was generated in 2008 (52 percent)
with a 12 percent YoY growth rate. This can be attributed
mainly to our ability to thoroughly understand such local
markets as Russia, Latin America, the Middle East, Southeast
Asia and Africa, and properly adjust to their unique needs with
customized solutions. Our success in these important regions
also centered upon our ability to maintain strong partnerships
with our corporate customers and a continuing demand for
D-Link networking equipment, specically Broadband and
Wi-Fi products, by builders of major infrastructure projects in
the regions.
Europe
Similarly, understanding the market and providing custom
solutions to meet its needs were the keys to some major
accomplishments in Europe in 2008. Even with all of the global
economic challenges, D-Link Europe was able to re-evaluate
the shifting market and quickly adapt to end the year on
stable footing. Prudent measures throughout the year, such
as cost reductions, improved inventory management, pricing
and operations control disciplines, combined to allow the
region to contribute 25.4 percent to total global revenue. Its
“Think Global, Act Local” approach resulted in signicant wins,
including continued leadership in the Wireless N market,
creation of a new central sales and marketing Business
Solutions team, further strong support for D-Link Green in
an especially environment-conscious region, and continued
focus on the service provider market by aligning with strategic
vendor partners, such as TalkTalk and AOL Broadband. Also in
2008, D-Link Europe’s logistics team reached and surpassed
its performance levels of previous years, with nearly a 100
percent accuracy rating for shipping 6.5 million products to
29 European countries.
North America
One of the most noticeable eects of the recession is the
renewed awareness among D-Link customers and potential
customers regarding their buying habits. Selling solutions
at a value is key in helping IT and networking managers,
as well as small- to medium-sized business owners, decide
where to spend their constricted budgets. The D-Link
value proposition combines quality products, exceptional
engineering and sales support, strong channel presence
and highly competitive pricing. In North America, D-Link
introduced several new programs in 2008, including a
revamped Reseller Partner Program and the industry’s rst
free switch test drive program. These and other special
promotions have proved successful in enhancing the value
of the D-Link brand for business customers.
Looking Ahead
As stated earlier, we are condent that D-Link is well prepared
for the post-recessionary era. Technologically, we have taken
our long-standing investment in D-Link 2.0 and turned it into
products and applications that change the way businesses
and consumers can understand and use them – seamlessly,
with minimum eort. We call it “mydlink” and have launched
a new dedicated website, along with an entire array of
mydlink-enabled products, newly launched or in progress,
that remove the once-daunting learning curve for people to
set up and use digital home products. The devices are just
a plug and click away from being manageable through the
website. Beginning with our network cameras, users can tap
into live video of their home or oce, record feeds on their
PCs and share these experiences with their friends and family.
Rather than the old model of simply selling a product to a
customer, we are creating stickiness with a series of devices,
killer applications and a user experience that will be tied to
the customer’s livelihood and their extended social network.
We also expect the 802.11n Wi-Fi trend to continue deep
into 2009 and beyond, as predicted by In-Stat in a report that
shows the latest standard-based chipsets outselling 802.11g
due to increased demand for mobile handsets and notebook
PCs, as well as the transition in business from Ethernet wired
installations to more 802.11n wireless solutions.
Thanks to You
I would like to take this opportunity to thank you – our family
of dedicated shareholders, employees, customers, partners
and friends – for your patience and condence during these
tumultuous times. Your support gives us increased optimism,
and provides the foundation for a successful future. One thing
is for sure – we are poised like never before to meet the needs
of computer networking on a global stage. We look forward to
more exciting times for all of us at D-Link.
Sincerely,
John Lee
Chairman
D-Link Group