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Acer posts healthy third-quarter growth

Acer Inc, the world's fourth largest PC vendor, posted profit growth in the third-quarter as notebook shipments rose, company executives said yesterday.

Its July-September net income hit NT$1.97 billion (US$58.6 million), 37.3 percent higher than last year. Consolidated revenue reached NT$82.52 billion, rising by 47.2 percent from NT$56.06 billion in the same period last year, it said.

"The trend of replacing desktops computers with laptops will accelerate over the next two years, which will benefit Acer, whose core strength lies in notebook computers," chairman Wang Jen-tang (王振堂) told investors yesterday.

Wang said notebook computers currently account for about 30 percent of the whole computer market, and that percentage will jump to 50 percent over the next two years.

The sequential growth was driven by increased notebook shipments as it gained share from rivals, he added.

The company posted a slight decline in gross margins at 9.9 percent from 11 percent three months earlier and 11.1 percent a year ago, as a result of the euro weakening against the US dollar, he said.

The fourth-quarter outlook seems promising as stronger orders of notebook computers are expected in the peak holiday season, Wang said, projecting that its worldwide market share for both laptops and desktops will rise to over 5 percent from 4.7 percent in the third quarter.

Acer also plans to beef up its desktop product lines, along with the fast-growing portable computer products, as both segments are important if it wishes to overtake Chinese computer giant Lenovo Group Ltd (聯想) and become a top-three PC player within the next two years, he said.

Revenues and income showed big increases on last year as Acer talked of its top-three goal during an investors meeting

According to Wang, HP's stable operations and Lenovo's well-managed client integration will pressurize Dell's expansion in the US and China, leaving Acer room for growth.

"We will continue our momentum and pursue a top-three spot by balancing growth and profitability," he said, adding that this is achievable as its total shipments will soar to 25 million units by then.

This year, Acer projected its desktop shipments to stand at 3 million units, with notebooks at 7 million units.

The company's shares dropped NT$4.7 to close at NT$67 on the Taiwan Stock Exchange yesterday.

Acer's results did not surprise industry watchers, as market and shipment growth in the third quarter were totally in line with earlier projections, said an analyst with the Taipei-based market researcher Market Intelligence Center (市場情報中心).

"However, how well it manages channel deployment and marketing strategies in China and the US will be critical to sustaining future momentum," he said.

He added that the performance of these important markets will serve as a growth indicator for Acer's business next year, and will be able to contribute to it achieving its top-three goal.
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