Acer Inc (宏碁) may face market share loss and drop out of the world’s top three PC brands soon, after the firm announced on Tuesday it was lowering its second-quarter shipment guidance — the third revision in less than six months, analysts said yesterday.
The stock, which has been on a tailspin as its woes pile up, closed limit-down yesterday at NT$48.90, the lowest in more than two years, and could fall further, they said.
Acer said in a statement on Tuesday that given a more conservative channel strategy, it was revising downward its second-quarter PC shipment forecast to a contraction of 10 percent, from its original forecast of flat shipments compared with the first quarter.
The company shipped 9.04 million PCs in the first three months of the year, down 15.8 percent from a year earlier, IDC data showed.
“It [Acer] attributed the weakness to recent company reorganizations, inventory adjustments and weak seasonality. In contrast, Asustek’s management has noted a continued improvement in demand from Europe since mid-March,” researchers led by Jenny Lai (賴惠娟) at HSBC Securities (Taiwan) Co (匯豐證券) said in a report.
“This gap could suggest a potential share shift away from Acer, and we continue to believe that Acer may lose its global No. 3 position in the near future,” the report said.
Acer was the world’s second-largest PC maker by shipments after Hewlett-Packard Co in the first quarter, according to Gartner. In IDC’s ranking, Acer was the third largest after HP and Dell Inc.
The company’s downward revision is “entirely unexpected,” Citigroup Global Markets analyst Kevin Chang (張凱偉) said in a client note, adding that Acer had twice reassured industry analysts it would meet its second-quarter guidance — one at a meeting on March 30 and later at a conference call on April 7.
JPMorgan analysts led by Gokul Hariharan said in a report that Acer faces “more downside risks and uncertainty” during the transition period.
“We believe it could take some time for investors to regain confidence in [Acer’s] operating outlook and earnings visibility,” they said.
HSBC slashed its target price for Acer to NT$35 from NT$61 amid concerns about weaker revenue momentum and increasing expense on retention and product development. Citigroup also cut its target to NT$35 from NT$49.
JPMorgan lowered its target price to NT$40 from NT$64, Nomura Securities cut it to NT$50 from NT$60, while Deutsche Bank trimmed it to NT$53 from NT$56.
The target prices for Acer shares may vary among brokerages, but analysts said Acer’s foray into tablet PCs and smartphones could take much longer than expected to bear fruit.
Acer has set up two new business divisions — touch business group and PC global operations — to embrace the competition from Apple Inc’s iPad.
HSBC said it was worried about the newly appointed heads for Acer’s tablet division.
“[Division co-head] Simon Hwang (黃杉榕) does not appear to possess a strong track record in this area,” HSBC said.
Hwang was the former chairman of E-Ten Information Systems Co (倚天資訊), a handheld device provider that Acer acquired in 2008.
Newly appointed president Jim Wong (翁建仁), a veteran in the PC business, also takes direct responsibility for the tablet division.
“Acer is very unlikely to succeed in tablet PCs due to Apple’s cost advantage, brand premium and willingness to take low margins,” Citigroup said.
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