EXCLUSIVE-Acer to protect margins, sees sales jump
Credit: Reuters
* Windows 7 to be positive factor on PC sales
* Aims to keep gross margins at 10 pct
* Says Microsoft working on new system for corporate clients
* Acer stock up 94 pct this yr vs 66 pct rise in main market
(Adds details, quotes, background)
By Phil Smith and Kelvin Soh
TAIPEI, Oct 22 (Reuters) - Acer (2353.TW), the world's No. 2 PC maker, aims to boost its revenue by more 70 percent over the next three years, while maintaining margins to avoid repeating a similar meteoric rise and fall less than a decade ago.
Much of that growth is set to come from low-cost netbook PCs, which Acer expects to rise over 50 percent in 2010, Chairman J.T. Wang said, citing an improving global economy and migration to smaller, the more mobile PCs for the explosive growth.
"The idea is to reach $30 billion as soon as possible," Wang told Reuters in an interview, in his first public comments since overtaking Dell (DELL.O) as the world's No. 2 PC maker.
"When we look at the overall market, if the PC market starts to grow from next year and handhelds have the potential to become a $200 billion market, $30 billion is a humble target."
The market expects revenue at Acer to reach T$573 billion
($17.6 billion) this year, according to 22 analysts polled by Thomson Reuters I/B/E/S.
The Taiwanese PC brand commanded about 14 percent of the global PC market in the third quarter, surpassing former No. 2 Dell (DELL.O) and coming second only to Hewlett-Packard (HPQ.N) at over 20 percent, according to research firm IDC. [nN14253064]
Acer expects to ship about 12 million low-cost netbook PCs this year, and is currently the biggest player in the field that was pioneered by its crosstown rival Asustek (2357.TW) in 2007. About 26 million netbook PCs are expected to be sold this year, IDC said in June.
Wang said Microsoft's (MSFT.O) launch of its Windows 7 operating system on Thursday is also expected to help sales, as consumers look to upgrade their computers running on the much-maligned Vista or the eight-year-old XP system.
"It's positive," Wang said. "Looking at Microsoft the past 10 years, they've made the operating system more complicated all the way. This time, they've made it simpler. It's a totally opposite direction of their design philosophy."
For a list of stories on the Windows 7 launch, click: [nN16351055]
NEW MICROSOFT SYSTEM
Wang said Acer would be able to maintain its gross profit margin of about 10 percent even as prices of components such as LCD panels DRAM memory chips climb as tech demand improves.
Such attention to margins would be important to avoid a scenario like Acer's rapid rise in the 1990s, when the company gobbled up market share at any cost and fell into several quarters of operating losses as a result.
"If you look at the past, even when component prices were up or down, we were able to maintain our gross margins at about 10 percent," Wang said. "I expect this to continue."
Spot prices of both LCD panels and DRAM memory chips that are used in every PC have climbed in recent quarters, riding on growing demand for flat-screen TVs and as chipmakers cut production to arrest rapidly falling prices. Separately, Wang said Microsoft is working on a new operating system that will be targeted at corporate customers, but he declined to give further details.
"The tides are turning and it's time for most customers to consider switching to the new system (Windows 7)," Wang said."I don't know when the new corporate-focused system will be launched, but they're looking at designing one now."
Acer shares fell 0.5 percent on Thursday in a TAIEX .TWII market down 1.2 percent.
(Editing by Doug Young and Anshuman Daga)
((kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.net))
((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: ACER/ . Keywords: ACER/
(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nTP259678
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
Follow Reuters