Acer aiming to improve non-Windows business

By Helen Ku  /  Staff reporter

Fri, Aug 09, 2013 - Page 13

Acer Inc (宏碁) yesterday said it planned to produce more mobile devices and Chromebooks running on Google Inc’s Android and Chrome platforms, amid the weakening global PC market.

The world’s fourth-largest PC maker also said it would reduce its Windows product shipments after reporting an operating loss of NT$613 million (US$20.49 million) in the second quarter, ending six consecutive quarters of operating profit.

“We need to improve our non-Windows business as soon as possible,” Acer chairman and chief executive officer Wang Jeng-tang (王振堂) told investors during a conference call.

Wang said the company is diversifying its product portfolio and hopes mid and high-end PC products will account for a larger part of the company’s total shipments in a bid to seek “long-term sustainability” in sales and market share.

The company expects sales contribution from non-Windows PC products to account for between 10 percent and 15 percent of its total sales this year, and to expand to between 20 percent and 30 percent next year.

While Acer has planned to strengthen its foothold in non-Windows PC markets, Wang said the PC industry’s three major ecosystems, including Android, Apple Inc’s iOS and Microsoft Corp’s Windows platforms, created “big confusion” to consumers.

“Consumers don’t know how to choose and what to use,” Wang said.

“So far, I think PCs, including desktops and laptops, are still the best devices in terms of productivity... Consumers are just puzzled by different new PC models and hesitate to buy new PC products.”

Higher expenses on research and development and marketing activities caused the company to swing into loss in the second quarter in the operating level, compared with operating profit of NT$29 million in the first quarter and operating profit of NT$188 million in the second quarter of last year.

However, last quarter’s net losses narrowed to NT$343 billion, from NT$515 billion in the previous quarter and NT$552 billion during the same period of last year, with losses per share of NT$0.13.

Gross margin dipped to 8.4 percent from 8.5 percent in the January-to-March period because of rising DRAM prices, Acer said.

Acer president Jim Wong (翁建仁) said the company aimed to break even in the third quarter in terms of its operating level.

He forecast shares of touch-panel products in the company’s total shipments to improve to between 20 percent and 25 percent this quarter, from 20 percent last quarter, while mobile PC shipments, including laptops and tablets, are likely to grow sequentially by between zero and five percent.

However, the company has lowered its annual tablet shipment target to between 5.5 million and 6.5 million units, from its projection in May of 5 million to 10 million units, Wong said.

Asked about Acer's full-year outlook, he said the company is trying to "sustain its market share while protecting its bottom line."

The company is aiming to stay profitable this year after registering losses over the past two years, he said.

Analysts hold more conservative views.

“As Acer’s recent shift of focus to higher-end models differs from the market trend of growing demand for low-price products and Acer’s previous brand perception, we think it is possible Acer will register a sequential decline in sales,” UBS Securities analyst Arthur Hsieh (謝宗文) said in a note yesterday. “Acer could make losses again if it is unable to control costs.”

SinoPac Securities Co (永豐金證券) forecast Acer would continue posting losses this quarter because of fewer products equipped with Intel Corp’s new Haswell processor, which only went on sale recently.

Acer’s shares closed down 3.97 percent at NT$20.55 yesterday.

Additional reporting by CNA