Acer to sell new smartphones after HP-Palm deal

A man walks past an 'Acer' office during the Mobile World Congress in Barcelona February 18, 2010 file photo.

TAIPEI (Reuters) - Acer Inc, the world's No.2 PC vendor, plans to introduce four new smartphone models later this year to help boost profits, a day after rival HP set its sights in the fast-growing smartphone market.

As the global economy shows more signs of recovery, Acer also said on Thursday it expects new laptop PCs to drive its profit margins higher after posting a 62 percent rise in first-quarter earnings.

"Competitive advantage of new products can help us boost profitability from the third quarter," Acer Chairman J.T. Wang told an investor conference even though smartphones make up only a very small amount of Acer's sales now.

Analysts say Asian technology firms vying for a bigger share of the hot smartphone market now face an uphill battle after the world's top PC maker Hewlett-Packard snapped up Palm.

But Acer also sees growth in its traditional PC market, forecasting 30 percent annual growth in global laptop shipments over the next two years, though some analysts say a shortage of key components remains a concern and could hurt PC makers' margins in the coming months.

"Its second quarter margin might be affected but the impact should be limited," said Yuanta Securities analyst Vincent Chen, referring to rising prices of key parts such as memory chips.

"Acer has scale and knows how to control costs very well, and third-quarter sales might be growing faster," Chen said.

PC sales typically grow into the third quarter thanks to back-to-school and pre-Christmas demand.

Acer, one of the few internationally recognisable Taiwan computer brands, booked a net profit of T$3.29 billion ($105 million) in January-March, versus T$2.03 billion a year ago and T$3.52 billion in the fourth quarter of 2009.

First-quarter operating profit margin rose to 2.7 percent from 2.2 percent the same period a year ago.

The profit was largely in line with a consensus forecast of T$3.23 billion made by Thomson Reuters I/B/E/S.

"Q1 was quite good and we've seen PC demand coming back very strong," Acer CEO Gianfranco Lanci told the same conference.

For Acer, getting bigger is a survival issue: Acer acquired PC rivals Gateway and Packard-Bell over the past few years, dramatically expanding its footprint in the United States.

Global personal computer shipments rose sharply in the first quarter, according to industry estimates released earlier this month, as businesses finally began to spend again on technology equipment.

Fast-growing Acer had a 13.6 percent share in the global PC market in the first quarter, while No.1 HP grabbed nearly 20 percent in the same period, according to IDC.

Acer's results came after the Taipei stock market closed on Thursday. The stock fell 1.35 percent, larger than the main TAIEX's 0.34 percent drop.

The stock hit a two-month high in mid-March but has headed south since then amid worries over rising parts prices.

(Reporting by Baker Li and Roger Tung, Editing by Jonathan Standing)