Acer Inc, the world's fourth-largest vendor of personal computers, yesterday posted an 87 percent increase in profit thanks to growth in the US and China markets, beating industry estimates.
The company reported first-quarter net income of NT$4.02 billion (US$125 million), or NT$1.82 per share, compared to NT$2.15 billion, or NT$0.97 a share, from a year ago, according to financial results released yesterday.
Consolidates sales were NT$83 billion, a 26.3 percent increase from NT$65.71 billion the previous year. Gross profit, however, narrowed to 10.7 percent from 12.1 percent, the data showed.
"A serious business war has already started and our major competitors have launched simultaneous attacks on us in Europe. But we are able to fight back, sustain our business and continue to grow this year," Wang Jeng-tang (
He said that breakthroughs in the US and Chinese markets had contributed to the company's strong results.
The company has been trying to cut its reliance on the European market, where growth is slowing down.
In the first quarter, the contribution from the EMEA (Europe, Middle East and Africa) region to Acer's total revenues was down to 56 percent from 66 percent a year ago.
The contribution from the US increased from 11 percent to 18 percent, while sales China overtook combined sales in Hong Kong and Taiwan to hit 6 percent, up by 2 percentage points, the company's statistics showed.
Wang said last month that sales in the US, a market to which Acer returned in 2003 after suffering losses for years, had already passed the US$1 billion-mark last year. Acer aims to double that figure to US$2 billion this year.
That means that the US market would constitute 16 percent of Acer's global sales target for the year, he said.
Meanwhile, increased sales from China pushed Acer to become one of the top four computer vendors in Asia for the first time in the first quarter, according to president Gianfranco Lanci.
The company's revenues in China were US$250 million in 2004 and will soar to US$1 billion next year, he added.
"The earnings were much higher than the industry's projections," said Kirk Yang (
According to Yang, Acer has good prospects this year, as the company's strategies in the US and Chinese markets are paying off, which will help drive the company's growth.
However, another analyst cautioned that although Acer has openly named Hewlett-Packard Co (HP) as its major competitor, Dell Inc's aggressive moves in the EMEA region might grow to be a threat.
Dell has decided to follow in Acer's footsteps by pushing lower-priced notebooks in these markets, said an analyst with Shinkong Investment Trust Co (新光投信), who asked not to be named.
Currently, Dell and HP are the world's top two computer vendors, while China-based Lenovo Group Ltd (
Acer's board yesterday also approved a dividend of NT$3.20 per share, which consists of a NT$3 cash dividend and a NT$0.20 stock dividend.
Shares of Acer rose 3.9 percent, the biggest gain since March 1, to NT$61.8 on the Taiwan Stock Exchange, before the earnings were reported.
The stock slid 28 percent in the first quarter, compared with a 1 percent gain in the benchmark TAIEX.
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