Aug. 31 (Bloomberg) -- Quanta Computer Inc., the world's largest maker of notebook computers, reported second-quarter profit doubled on sales of laptops to customers including Hewlett-Packard Co. and Dell Inc.

Net income climbed to NT$4.24 billion ($128 million) from NT$2.11 billion a year earlier, the Taoyuan, Taiwan-based company said in a statement today. Quanta was expected to report profit of NT$3.5 billion, according to the mean estimate of five analysts compiled by Bloomberg.

Orders for new models to clients including Hewlett-Packard and Dell, the world's two largest makers of personal computers, helped drive a 52 percent gain in sales to NT$153.9 billion. Quanta today raised its full-year target for notebook shipments to 28 million, from a previous projection of 25 million.

``The improved profitability was helped by new PC models,'' said Andrew Wang, who helps manage the equivalent of $1.2 billion at Prudential Financial Securities Investment Trust Enterprise in Taipei. ``These new machines have more features and functions and come with a higher margin than old models.''

Shares of Quanta rose 1.5 percent to close at NT$53.70 in Taipei before the earnings were announced. The stock has declined 7.3 percent this year.

Gross margin, which measures sales minus the cost of goods sold, rose to 4.1 percent from 4.0 percent in the first quarter, at Quanta's parent level, which doesn't include affiliates. Gross margin was 5.4 percent a year earlier.

Third-quarter notebook shipments will rise at least 15 percent, Quanta said.

Video Players

To lessen the reliance on its notebook business, Quanta will increase production of electronics including portable video players and global-positioning system devices. Quanta will spend $31 million on a factory in Jiangsu Province, near Shanghai, Chief Financial Officer Tim Li said in a briefing today.

Non-notebook products will account for approximately 22 percent of sales this year, rising to more than 25 percent next year, Li said. The company's laptop factory in Songjiang, also near Shanghai, is the world's largest.

``We'll separate non-notebook production from our existing facility in Songjiang so we can build up our electronic- manufacturing services business,'' Li said.

Palo Alto, California-based Hewlett-Packard, the world's largest computer supplier, forecast sales this quarter of $27 billion to $27.2 billion, exceeding analysts' estimates. Dell, the second largest, yesterday posted second-quarter sales of $14.8 billion, topping estimates of $14.6 billion.

Global notebook shipments will rise 45.6 percent in the third quarter from a year earlier, while motherboards shipments, which track desktop sales, are expected to increase 16.5 percent, according to Aug. 23 and July 25 reports by Citigroup Inc. analysts.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

Last Updated: August 31, 2007 06:21 EDT