Taiwanese PC maker Acer Inc (宏碁) could face the risk of operating losses this quarter amid headwinds such as delayed PC demand because of the expected launch of Microsoft Corp’s Windows 10 operating system next month, inventory piling up at sales channels and high hedging costs linked to foreign-exchange volatility, analysts said.
“We expect Acer’s sales this month to recover, but they would be insufficient to offset the potential losses in April and May,” Jenny Lai (賴惠娟), head of equity research at HSBC Securities Taiwan Corp, said in a report on Thursday.
Last week, Acer said that sales dropped by 30.86 percent annually to NT$17.66 billion (US$565.55 million) last month.
Sales totaled NT$33.48 billion for April and last month, a decrease of 25.25 percent from the same period last year and the lowest April-May sales since 2005.
HSBC now expects Acer’s revenues this quarter to be NT$61.73 billion with a net loss of NT$166 million, or NT$0.05 per share.
An Acer official who declined to be named told the Taipei Times that last month’s sales results reflected the impact of PC purchases being delayed before the anticipated launch of Windows 10.
The official added that the negative impact might extend to this month and continue affecting Acer’s performance.
Acer’s crosstown rival, Asustek Computer Inc (華碩), is also experiencing a relatively weak quarter for its PC segment.
Asustek told investors on May 11 that it expected PC shipments to decline this quarter by 7.4 percent to 5 million units from last quarter’s 5.4 million units because of lower-than-expected demand.
Acer founder and former chairman Stan Shih (施振榮) in February said the firm’s cloud-computing business would mature this year and become a sales growth driver next year. However, Acer’s declining share price reflects investors’ lack of faith in the company, whose PC segment still accounts for nearly 80 percent of its total revenue.
Acer shares have plummeted by 27.4 percent so far this year to close at NT$15.5 on Friday in Taipei trading, weaker than Asustek shares, which have fallen by 15.73 percent over the same period to NT$292.
Both stocks have trailed behind the broader market’s performance, with TAIEX down 0.06 percent this year.
Lai said Acer is likely to see a recovery in sales momentum next quarter, after Windows 10 launches.
Sales could grow 22 percent to NT$75.44 billion next quarter from this quarter, she said.
However, Windows 10 would not drive a sustainable replacement PC demand, as Microsoft offers free upgrades for users of Windows 7 and 8, and the global PC industry would return to soft demand in the fourth quarter this year, Lai said.
The Market Intelligence and Consulting Institute (產業情報研究所) recently predicted that PC shipments worldwide could reach 287 million units this year, down 5.7 percent from last year’s 304 million units.
Acer’s PC shipments this year would be flat from last year’s 18.09 million units, with a global market share of 11 percent, compared with last year’s 10 percent, institute senior manager Charles Chou (周士雄) said.
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