Acer Strong in Q1 With Aggressive Growth

Taiwan’s Acer, the world’s No.3 PC vendor, posted strong results for its core business in the first quarter and raised its sales forecast for the rest of the year as it expands aggressively.

Ranking behind Hewlett-Packard (NYSE: HPQ) and Dell (NASDAQ: DELL) but ahead of China’s Lenovo, Acer has expanded into fast-growth consumer markets such as China, India, Russia, Latin America and the Middle East.

It has grown through a series of acquisitions, including U.S. computer brand Gateway and Paris-based Packard Bell, giving it 9.5 percent of the global PC market in January-March, according to preliminary data from Gartner cited by Acer.

Acer said fear and uncertainty in the wake of the U.S subprime mortgage crisis had begun to ease, and retail sales had not been hit by a slowing U.S. economy, as some industry watchers had forecast.

As part of its expansion, Acer aims to ship 25 to 30 million PCs this year, up from a previous target of more than 25 million. The company said it shipped 20 to 21 million PCs last year, of which 17 to 18 million were notebook computers.

“Second-quarter demand is very good,” Chief Executive Gianfranco Lanci commented to an investor conference. “Twenty-five million is the minimum level.”

Acer expects particularly strong growth from its notebook PC division, with shipments estimated to rise more than 40 percent this year, Chairman J.T. Wang told reporters.

“We see good progress on notebooks, especially in the BRIC region (Brazil, Russia, India, China), and we also just started doing business in Japan, which is a market we’ve never touched before,” he said.

January-March net profit dropped to T$2.95 billion ($97 million) from T$5.66 billion a year ago, but beat market forecasts for T$2.51 billion, according to eight analysts surveyed by Reuters Estimates.

The drop in net profit was mostly due to one-off investment gains this time last year. First-quarter operating income, which reflects operations from its core PC business, rose to T$2.74 billion from T$1.95 billion a year ago.

“They’re in fairly good shape in the first quarter, and its fastest-growing area is still Asia Pacific, but Europe demand could slow a bit at the end of Q2,” said a JP Morgan analyst, who declined to be named.

To diversify its product line, Acer plans to sell low-cost PCs this year, following a popular reception for such models from local rival Asustek Computer.

Acer also said this week it plans to launch laptops with WiMax capabilities in June or July as the new high speed wireless technology could be a fresh catalyst for the notebook sector.

In addition, Acer will get more involved in the smartphone market after its $290 million acquisition last month of Taiwan portable device maker Eten Information Systems.

Acer shares fell 2.3 percent to T$63.50 ahead of the results. The main TAIEX index ended down 0.3 percent.

In January-March, Acer shares fell 14 percent, while the main board edged 0.8 percent higher. Shares in Chinese rival Lenovo dropped 29 percent in the same period, underperforming the Hang Seng Index’s .HSI 18 percent decline.

Researcher IDC has said worldwide PC shipments rose a brisker-than-expected 14.6 percent in January-March, and researcher Gartner (NYSE: IT) predicts the global PC market will ship 10.9 percent more computers this year than in 2007, below an earlier estimate for 11.6 percent growth.

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