Netbook PC pioneer Asustek sank deeper into the red with a net loss of T$131 million ($3.9 million) in the second quarter, hit by foreign exchange losses and dashing hopes that it was on the road to recovery.

Taiwan's Asustek on Tuesday reported a bigger-than-expected net loss of T$131 million ($3.9 million) for April-June, hit by a massive T$953 million foreign exchange loss as the Taiwan dollar appreciated by more than 3 % against the U.S. dollar.

The overall loss was well below market expectations for T$1 billion net profit, and worse than the T$5.64 billion it recordeda year ago.

However, it managed to eke out a small operating profit of T$61 million after two straight quarters of such losses, after going through a reorganization process that saw lay-offs and a series of product cuts to streamline its operations.

For the third quarter, the company said it aims to ship about 1.8 million notebook PCs, about 1.5 million of its Eee PC line of netbooks and about 5.5 million to 6 million motherboards, Asustek said in a statement.

That would be higher than the second quarter, when Asustek shipped 5 million motherboards, 1.2 million notebook PCs and 1.1 million Eee PCs.

Revenue in the second quarter fell more than 15% from the previous year to over T$48.9 billion, hit by the growing popularity of the low-cost netbook PC and other cheaper laptop models.

Asustek pioneered the highly successful netbook PC in 2007, but has been gradually losing market share there as bigger rivals such as Acer, HP and Dell enter that segment of the market.

The firm is also making a foray into the fast-growing smartphone market with location device maker Garmin, but has set modest targets for itself that underscore its vulnerability as a new player in the highly competitive sector.

Asustek's shares have lagged the main board so far this year, having climbed about 60% compared with a 48% advance on the big board.