Analysts bullish on Acer despite profit drop in Q4

Despite seeing a 61-percent drop in profits for the final three months of last year from the same period in 2002, analysts remained bullish yesterday about Taiwan's leading computer brand Acer Inc's performance.

Acer, Taiwan's third-largest computer company by sales, posted its full-year unaudited earnings with the Taiwan Stock Exchange Corp yesterday.

By subtracting the audited results for the first nine months of the year from the unaudited figure, net income dropped from NT$3.6 billion in the final quarter of 2002 to NT$1.4 billion last quarter.

The company's sales increased threefold over the same period from NT$10.2 billion to NT$30.9 billion last quarter, according to Acer's monthly sales figures.

"Operating income improved quite considerably, so I am still positive on my outlook for Acer," said Stephen Tseng (曾緒良), an analyst at Yuanta Core Pacific Securities Corp (元大京華證券).

For the whole year of 2003, the company's profit fell to NT$7.31 billion, or 15 percent, from NT$8.6 billion in 2002.

An official at Acer stressed the rise in the company's core business last year.

"Overall Acer's 2003 profit is lower compared to 2002 due to fewer disposals of stocks," Acer's senior public relations officer Henry Wang (汪島雄) told the Taipei Times yesterday.

"But the operating income from our IT business, which is our core business, has increased threefold," Wang said.

Acer has booked profits from sales of shares in other companies within the Acer Group, like Wistron Corp (緯創資通), Taiwan Cellular Corp (台灣大哥大), BenQ Corp (明基電通) and Ambit Microsystems Corp (國電), but the level of divestments last year was lower than 2002.

Acer has seen rising sales in key markets, another analyst said.

"Fourth quarter sales revenue exceeded my own expectations," said Ben Lee (李柏彥) an industry analyst at Nomura Securities in Taipei.

"In the fourth quarter last year, market demand in Europe and China was pretty strong. Acer relies on these two areas," Lee said.

Two weeks ago, Acer reported that sales of notebook computers to Europe doubled to almost 1 million units last year compared to 2002.

Acer said that in the third quarter last year it became the world's fifth-largest seller of laptops and the second largest in Western Europe.

Analysts said the company should maintain its momentum in Europe this year.

The company has been increasing output and cutting costs, Lee added.

"For the whole year, the company improved its performance by raising its margins," he said. "I expect net income to experience huge expansion this year."

To increase revenue, Acer may start selling flat-panel televisions fitted with digital decoders this quarter, a Chinese-language newspaper reported, citing Wang.

The company has hired Quanta Computer Inc (廣達電腦) to manufacture the television sets under Acer's brand name, the report said.

Shares of Acer rose NT$1.0, or NT$1.9 percent, to close at NT$53 on the TAIEX.