Acer Inc (宏碁) last week reported its fifth consecutive profitable quarter for last quarter, but analysts said the company is not out of the woods yet, as they do not see any major growth catalyst in the near future.
The company’s issue is not cost control, but about seeking a revenue growth driver because it would be difficult to cut costs much lower, Barclays PLC analyst Kirk Yang (楊應超) said in a note on Thursday, after Acer reported net income of NT$173 million (US$5.62 million) for the first quarter of the year.
“Unless Acer can find a way to grow its sales, now down year-on-year for 11 quarters in a row ... it will experience diseconomies of scale, and we believe it could soon lose its global No. 4 PC market share position to Asustek (華碩),” Yang said.
Last quarter’s profit — down 53.54 percent from the previous quarter, but much higher than NT$1.12 million a year ago — was below market consensus of NT$344.5 million.
Acer posted earnings per share of NT$0.06 last quarter, compared with a market forecast of NT$0.10.
“Acer reported another weak quarter, and we do not expect a turnaround any time soon,” Yang said.
Acer shares dropped 1.28 percent to NT$19.3 on Friday. They have fallen 9.6 percent this year, underperforming the broader market’s 4.13 percent increase, according to Taiwan Stock Exchange data.
As global PC market demand continues to weaken, larger vendors like Lenovo Group Ltd (聯想) and Hewlett-Packard Co (HP) are expected to continue to take market share from smaller vendors, JPMorgan Securities Ltd analyst Gokul Hariharan said.
In the first three months of this year, Acer shipped 5.18 million PCs, down 6.8 percent from a year ago, International Data Corp (IDC) said in a recent report. Asustek became the world’s No. 4 PC vendor last quarter with 7.4 percent global market share, or 5.36 million units, while Acer held a 7.2 percent share, IDC said.
“With declining PC demand and foreign currency fluctuations in Acer’s key markets like emerging markets and Asia-Pacific, we believe that it is very difficult for the company to win back share in the PC space,” Hariharan wrote in a note on Wednesday.
Although the PC market is shrinking, Acer will secure a “reasonable” market share worldwide, Acer founder Stan Shih (施振榮) said on Friday.
“We will not blindly seek expanding our share in global market, but we are certain that we will be the last man standing in the PC industry,” Shih told reporters on the sidelines of a forum held by the Stans Foundation (智榮基金會) in Taipei.
Shih would not discuss specific guidance for the current quarter, but said the notebook products recently unveiled in New York received a warm reaction.
Daiwa Capital Markets Inc analyst Steven Tseng (曾緒良) said he believes Acer’s core business is still vulnerable as the demand for PC remains weak this quarter.
Sales this quarter might grow just 3 percent, to NT$69.98 billion, from last quarter’s NT$67.95 billion due to seasonal factors, he said.
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