Acer plans on rejoining the ranks of the PC elite

Acer Inc, the nation's only electronics company with a globally recognized brand name, said it expects to return to the ranks of the world's five largest personal-computer makers this year after re-entering the US market.

"We're determined to come back in the US," said Acer president Wang Chen-tang (王振堂) in an interview.

"We want to compete with Dell" Computer Corp, the world's second-biggest PC maker, he said.

Acer, which slipped to No. 7 after retreating from the US retail market in 1999, plans to form a partnership with an unidentified distributor in the US to compete with Dell's strategy of selling directly to consumers, Wang said. The Taipei-based company, which has a 2.7 percent share of the global PC market, may succeed in overtaking Japan's NEC Corp and Toshiba Corp this year to regain the No. 5 place, analysts said.

"Acer has been well ahead of the market for the past two quarters and is growing faster than NEC or Toshiba," said Roger Kay, an analyst with market researcher International Data Corp.

Acer, which yesterday introduced a new line of PCs with home-entertainment capabilities, expects to ship 2.5 million desktop computers this year and 2 million notebook PCs, raising its market share to about 4 percent. The company will be among the first to offer new laptops that use Intel Corp's Centrino chips, which can connect to the Internet through a radio link, according to Kelly Wu (吳惠瑜), Intel's general manager in Taiwan.

In the first quarter this year, Acer's shipments rose by 25 percent from the same period a year ago, outpacing a 15 percent rise for No. 5-ranked Toshiba's shipments and a 7 percent fall for No. 6 NEC, International Data said.

Wang reiterated Acer's forecast in March that the company's net income this year will fall by about 31 percent from last year. The company, which has depended on sales of shares in units that make flat-panel displays and mobile phones for more than half of its profit, said earnings per share from its main branded-PC business will double next year.

Acer expects to record earnings per share of NT$1 from its branded-product business this year, increasing to NT$2 next year.

The company's overall earnings per share target this year is NT$3 compared with NT$4.46 in the 12 months to Dec. 31 last year.

Acer said it aims for its core business to account for more than 50 percent of profit next year.

Acer has managed to maintain better profits from the desktop PC business than rivals by shifting manufacturing to suppliers with global networks such as Hon Hai Precision Industry Co (鴻海精密), the country's largest electronics manufacturer.

Acer makes a gross margin, or the percentage of sales left after production costs, of as much as 15 percent from desktop PCs compared with 11 percent for laptops, Wang said.

"More competitors are giving up the desktop business," he said.

Acer no longer makes its own products and uses six domestic manufacturers as suppliers.