Thu, Oct 21, 2010 - Page 11 News List

Margin boosts Acer’s income 24%

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Acer Inc (宏碁), the world’s second-largest computer maker, posted its fifth consecutive quarter of earnings growth after its focus on profitability helped the company post a record operating margin.

Third-quarter net income climbed 24 percent to NT$4.29 billion (US$139 million) from NT$3.47 billion a year earlier, the Taipei-based company said yesterday. The average of 11 analysts’ estimates compiled by Bloomberg was profit of NT$4.1 billion.

Acer withheld price cuts in the quarter as part of its strategy to boost profitability resulting in a drop in market share. Declining component costs and the euro’s appreciation also helped Acer post record operating profit margin.

“Acer chose not to get into a price war, so they lost share while margin improvement was better than expected,” said Steven Tseng (曾緒良), who rates the stock “hold” at RBS Asia Ltd in Taipei. “The stronger euro also helped profit as Europe is their biggest market.”

Third-quarter consolidated revenue was little changed from a year earlier at NT$167.2 billion. Sales growth of 11.3 percent from the prior quarter was in-line with its own guidance for a 10 percent to 15 percent rise, Acer said.

Operating profit, which measures sales less operating costs, climbed 11 percent to NT$5.28 billion, it said. Operating margin, the ratio of operating profit to sales, was a record 3.16 percent, it said.

Acer, which gained share in the last two years by selling low-cost netbooks, aims to increase its operating margin to 4 percent within two years, Jim Wong, head of the company’s IT products division said in a Jan. 22 interview. That figure was 2.8 percent in the second quarter.

Prices of memory chips, the most common semiconductor used in computers, fell 15 percent in the third quarter from the preceding three-month period, Nanya Technology Corp (南亞科技), Taiwan’s second-largest memory-chip maker, said yesterday. The euro climbed 7.9 percent against the New Taiwan dollar last quarter boosting the local currency value of the company’s exports to Europe.

Acer’s share of the global computer market fell to 13 percent in the third quarter, from 13.5 percent a year earlier, Framingham, Massachusetts-based researcher IDC said last Wednesday. In the US, it was replaced by Apple Inc as the third-largest computer supplier, IDC said.

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