Taiwanese PC brand Acer Inc (宏碁) is likely to report first-quarter losses this year as the rising cost of electronic components could eat away at its bottom line, an Asian brokerage said.
However, the brokerage said in a research note that Acer could report a net profit for the whole year due to efforts to develop ultra-thin notebooks, hybrid notebooks, gaming computers and chromebooks, which command higher profit margins.
Acer reported a loss per share of NT$1.89 in the final quarter of last year because of an intangible asset impairment charge of NT$6.36 billion (US$209.7 million), after posting earnings per share of NT$0.27 for the previous three quarters.
Photo: courtesy of Acer Inc
The brokerage said Acer could report a net loss per share of NT$0.13 during the first quarter this year, extending the downturn from the previous quarter, as price increases for certain components, such as DRAM chips, have depressed the company’s gross margin.
Even though Acer has been diversifying its product lines by entering the virtual reality market to offset the slowdown in the global PC market, the efforts are unlikely to bear fruit any time soon, the brokerage said.
Despite its net loss in the fourth quarter, Acer still reported an operating profit of NT$133 million for the period, driving the brokerage to raise its target price for Acer shares to NT$15.25 from NT$15.22 and maintain its “hold” recommendation.
On Friday last week, Acer shares closed down 0.35 percent at NT$14.4 on the Taiwan Stock Exchange.
Trading on the stock market resumes tomorrow after the four-day Tomb Sweeping Day holiday.
Even if Acer posts a loss in the first quarter, it could turn profitable in the second quarter, with estimated earnings per share of NT$0.03, NT$0.13 and NT$0.22 for the second to fourth quarters respectively, by selling more products with higher profit margins, the brokerage said.
For the whole of this year, Acer is expected to post earnings per share of NT$0.25, the brokerage said.
Central News Agency cannot identify the brokerage because media outlets are not allowed to report the name of a foreign brokerage when it gives a forecasts for a specific stock.
Meanwhile, a US-based brokerage said it has maintained its “underperform” rating and target price of NT$11 for Acer shares, citing concerns over component price increases and the impact of a stronger New Taiwan dollar, which appreciated more than 6 percent against the US dollar last quarter.
The US brokerage said it has cut its forecast for Acer’s profit this year by 4 percent to earnings per share of NT$0.44, even though gaming computers are likely to increase the company’s sales by 4 percent.
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