Acer Inc’s (宏碁) announcement last week that it would use the Founder (方正) brand in China may help it increase PC sales in that market, but analysts cautioned that the company must first deal with the competition from Apple’s iPad and weak demand in both the US and Europe before bearing fruit from its Chinese expansion plan.
The increasingly popular iPad and similar tablet devices have recently fueled concerns among industry analysts as to whether Taiwanese PC brands and contract makers can weather the impact on their netbook and notebook shipments.
However, Acer, during an analyst meeting held on Thursday, still maintained a guidance of 10 percent to 15 percent in quarterly sales growth for the July to September period and predicted 10 percent to 15 percent sales growth in the second half from the first six months, according to separate reports issued by Credit Suisse, Goldman Sachs and Citigroup.
The company’s positive guidance came after Credit Suisse last week downgraded its share recommendations on both Quanta Computer Inc (廣達電腦) and Compal Electronics Inc (仁寶電腦), while maintaining its rating on Wistron Corp (緯創) — Taiwan’s top-three original design manufacturers (ODM) of notebooks, citing both iPad’s potential impact on their netbook shipments and a new threat on the notebook front stemming from leading electronics manufacturing service (EMS) providers such as Hon Hai Precision Industry Co (鴻海精密) and Flextronics International Ltd.
“We maintain our conservative view on the second-half notebook shipments for the top-three ODM makers, with aggregate 8 percent and 2 percent quarter-on-quarter shipment growth in the third quarter and fourth quarter respectively,” following a 10 percent quarterly increase in the second quarter, Credit Suisse analyst Robert Cheng (鄭勝榮) said in a report on Thursday.
While Credit Suisse said the netbook segment faced the biggest volatility and uncertainties in the PC market this year, and Goldman Sachs warned that strong demand for the iPad would likely cannibalize netbook growth, Acer told analysts on Thursday it expected 20 percent year-on-year growth in netbook shipments for this year. That was compared with a 3 percent rise forecast by Goldman Sachs.
“Acer believes the iPad may most negatively impact mid-to-high-end regular notebooks rather than the low-end notebook or netbook market, but we think netbook shipments may still slow down when tablet/pad products become more popular,” Goldman Sachs analyst Henry King (金文衡) said in a client note on Friday.
Citigroup analyst Kevin Chang (張凱偉) said he believed Acer could achieve its growth targets. However, in a note to customers on Friday, he said that was because the company seems to have no meaningful inventory problem for the quarter, while most of its competitors are facing a still-high inventory in view of a potentially weak back-to-school buying season.
“We believe better inventory management is exactly the reason why Acer can deliver a better third quarter guidance than its peers,” Chang wrote.
The three analysts, however, are positive on the newly announced Acer-Founder partnership, saying Acer has a good track record in running multi-brands globally and the latest deal will help the firm to further penetrate the Chinese market and boost its sales there.
Acer, which Gartner ranked as the world’s second-largest PC brand in the second quarter, last week inked a deal with the second-largest Chinese PC vendor, allowing it to use Founder’s brand in China for seven years for a royalty fee of US$69 million.
With the use of dual Acer/Founder brands and the help of Founder’s sizable channel network in China, “Acer’s market share would rise to No. 3 from No. 6 in China if Founder PC shipment is incorporated into Acer’s,” King said.
Based on International Data Corp’s tallies, the aggregate market share of Acer and Founder accounted for 9.4 percent in the first quarter of this year, after Lenovo Group Ltd’s (聯想) 23.8 percent and Hewlett-Packard Co’s 10.1 percent, but ahead of Dell Inc’s 7.9 percent.
Nonetheless, the Taiwanese firm will only start to see the contribution from its partnership with Founder materialize in the fourth quarter at the earliest and bring in a revenue of US$2.5 billion within a year, the analysts said.
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