Acer Inc (宏碁), the world’s third-largest PC brand, said yesterday that European snowstorms had adversely impacted its sales in the fourth quarter of last year, after Morgan Stanley analysts on Tuesday lowered their sales forecast and target share price because of the heavy snow.
“Considering the circumstances, it would be hard for us to achieve the earlier target,” Acer’s spokesman Henry Wang (汪島雄) said by telephone.
Wang said sluggish spending in the wake of the weather hazards was also a reason for it missing the target.
He did not say how much lower the fourth-quarter sales would be compared with the previous quarter. In October, however, the Taipei-based company expected fourth-quarter revenue to increase between 5 and 10 percent from the previous quarter and forecast revenue to continue rising by between 10 and 15 percent this year.
Shares of Acer fell 4.28 percent to NT$85 on the Taiwan Stock Exchange yesterday, a day after Morgan Stanley analyst Grace Chen (陳星嘉) said in a report that Acer’s revenue would decline by 9 percent, with a lowered target price of NT$100 for the stock from NT$106 set previously.
Morgan Stanley was not the only foreign brokerage that predicted Acer would miss its quarterly sales target.
Goldman Sachs analyst Henry King (金文衡) said yesterday in a report that he expected Acer to experience a 5 percent decrease in sales in the October-to-last month period from the previous three months because of European snowstorms and NT dollar appreciation, and also lowered its 12-month target price to NT$93 from NT$100.
“Fourth-quarter demand in Western Europe seems weaker than the market expected on financial issues, heavy snow and iPad cannibalization,” King wrote in the report.
However, with a low comparison base in the fourth quarter, Acer is likely to see a 3 percent increase in the first quarter, he added.
Citigroup yesterday also downgraded Acer to “sell” from “buy,” with a new target price of NT$75 from NT$97 set earlier, analyst Kevin Chang (張凱偉) said in a separate report.
“2011 will be a tough year” for Acer, Chang said. He said Acer had a higher exposure to the consumer notebook segment than Dell Inc and Hewlett-Packard Co and therefore is poised to face a larger impact from tablet PC cannibalization. Moreover, an expected stronger corporate notebook demand than consumer notebook demand this year also looks negative to Acer.
Citigroup predicts Acer will deliver only 9 percent earning growth this year, given its forecast of a 13 percent increase in notebook shipment growth and 2.5 million units in tablet shipments.
Acer had earlier targeted 25 percent growth in notebook shipments this year, with 8 million to 10 million units in yearly tablet shipments.
Addtional reporting by Jason Tan
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