Defying a slump in the tech sector, Hon Hai is one of the few Taiwan electronic firms reporting strong results.

While it missed optimistic market expectations, analysts say cost-cutting, economies of scale and diversification will ensure continued growth this year.

``Hon Hai's efficiency makes it one of the most competitive companies in Taiwan,'' said Beyond Asset Management managing director Michael On.

Hon Hai earns about two thirds of its revenue making components and assembling desktops for computer firms such as Dell and Hewlett-Packard.

It has branched out into game consoles, digital music players and liquid crystal display television sets, helping to keep gross margins steady at about 12 percent last year.

Hon Hai earned a net profit of NT$7.32 billion (HK$1.81 billion) in the first quarter, up from NT$5.68 billion a year earlier. It gave no reasons for the fall in profit from NT$8.62 billion in the fourth quarter of last year.

The result fell short of a survey of eight analysts that forecasted a net profit of NT$8.22 billion for the first quarter.

Hon Hai set a cash dividend of NT$2.50 per share and a 20 percent stock dividend based on last year's earnings.

It earned a net NT$29.76 billion last year, up 18 percent.

Its Singapore-based rival, Venture, has reported a 1.3 percent fall in first-quarter earnings, due to fewer printer orders.

Its other Singapore-based rival, Flextronics International, has yet to report.

Hon Hai's second-quarter net profit would be flat, analysts said, but was expected to rise to NT$9.48 billion in the third and NT$11.17 billion in the fourth quarter.

Annual profit is expected to jump 23 percent this year to NT$37.16 billion and to rise by a further 20 percent to NT$44.48 billion next year.

REUTERS