Saturday, May 1, 2010

Acer chairman demands higher margins; launching new internet devices

Acer has posted a 9.7% gross margin and 2.7% operating margin for the first quarter of 2010, but company chairman JT Wang indicated that Acer's margins need to increase to over 10% and 3%, respectively.

Wang noted that Acer plans to launch more products to achieve its goal for gross margins, and will also put more attention on its channel operations and marketing in China. The company aims to raise its share of China's notebook market above 10%.

Acer plans to host a launch conference in Beijing to introduce a series of Internet devices at the end of May and expects these new devices to boost its third and fourth quarter gross margins, Wang noted.

Wang also pointed out that Acer's Timeline X increased the company's overall notebook sales in several regions and it expects the models to benefit the company's second quarter profit.

As for the China market, Wang said that Acer is aggressively studying consumer demand through its Beijing and Shanghai R&D teams and is keeping close contact with important channel players as well as hiring sales to promote its products.

Acer expects it revenues from China to reach US$1.5 billion in 2010, Wang added.

For the second quarter of 2010 Wang noted the company's notebook shipments will hold level sequentially, while volumes in the second half will be 10% higher than the first. Targeted annual shipments remain at 42-45 million units.

As Gartner's figures of notebook shipments showed that Acer has surpassed Hewlett-Packard (HP) in the first quarter, Wang expects HP will launch netbooks in some specific markets to boost its volumes as a counter method.

Wang also noted that the company expects to surpass HP officially in the notebook segment in 2010, and to become number one in PC industry in 2012.

Acer president Gianfranco Lanci pointed out that notebook demand in the second quarter remains strong, while related sales are also healthy despite that Europe is currently facing its bond crisis and upstream components are seeing shortages. Lanci expects overall product shipments in the second quarter to grow slightly or remain flat sequentially, but the company's revenues will stay level due to drops in the euro.

Acer has announced revenues of NT$16.21 billion (US$5.1 billion) for the first quarter of 2010, up 36.1% on year, while operating income reached NT$4.39 billion (US$137.8 million), a growth of 70.6% on year.

Acer's net profits in the quarter reached NT$3.29 billion (US$103.5 million) with EPS at NT$1.25 and the company will distribute dividends of NT$3.11, NT$3.1 in cash and NT$0.01 in stock.

Acer in the first quarter booked a negative NT$227 million in non-operating income due to losses in currency exchange rates. But since the EU has already started to provide support to European countries facing financial trouble, the euro is unlikely to see further drop in the second quarter, the company said.

Lanci pointed out that Acer's desktop segment saw a slight growth in the first quarter, although global shipments of traditional desktops declined. Small form factor (SFF) and all-in-one PCs both enjoyed excellent growth. Lanci noted that the company will next focus on developing 3D and touch-panel PCs.

As for netbooks, Lanci believes the segment will maintain a stable 20% share of the global notebook market, while Acer will maintain a 25% shipments proportion of its total notebooks.

Lanci also noted that Samsung Electronics is a strong competitor to Acer in netbooks. Although Samsung has strong connections in the telecom channel, Acer has a more complete lineup in traditional channels and Acer will work on maintaining its lead.

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