Acer upbeat on outlook despite challenges ahead

TAIPEI Thu Apr 26, 2012 8:29am EDT

Acer's Chairman J.T. Wang poses for a photo after an interview with Reuters in Taipei December 14, 2010. REUTERS/Pichi Chuang

Acer's Chairman J.T. Wang poses for a photo after an interview with Reuters in Taipei December 14, 2010.

Credit: Reuters/Pichi Chuang

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TAIPEI (Reuters) - Taiwan's Acer Inc gave an upbeat outlook for the second half, betting on the launch of Microsoft's new Windows system and more slimline ultrabook computers as it continues to recover from a series of losses and a management shakeup.

The world's No.4 PC vendor by shipments said demand in the second quarter looks "normal" compared to the first half of last year, but said consumers remain cautious due to global economic issues. The company said the PC industry should start growing this year and reach a double digit pace in 2013.

"We have restarted on a positive cycle and are improving day by day," Acer's chairman, J.T. Wang, told an investor conference. "Overall, our competitiveness is coming back. Our market share in the first quarter was 10.9 percent, Dell was 11 percent. In not so long a time we will be back to No.3."

Acer said it was betting on ultrabooks, the super-thin laptops similar to Apple's MacBook Air, to revive the traditional laptop computer segment that has been pummeled by the popularity of tablets.

Acer suffered last year after it failed to counter devices like Apple's dominant iPad. Disagreements over how to counter the threat led to the abrupt and acrimonious departure of its chief executive last March.

Acer then reported two consecutive quarters of losses last year from April to September [ID:nL3E8FO6FX] due to various restructuring charges. But in a sign that the turnaround still has some way to go, on Wednesday Acer posted a first-quarter net profit below expectations. [ID:nT8E8F6013]

Even in ultrabooks it faces a challenge because sales have yet to live up to expectations. Wang blamed an "inadequate marketing effort by the whole PC industry and high prices of ultrabooks" for the low consumer interest.

Acer said it sees its ultrabook shipments in the second quarter at two and a half times that of the first quarter and will keep growing for the rest of the year with four new models planned.

Acer said revenue in the second quarter will be "a little bit" better than the first, but will improve more in the rest of the year. It also sees its operating margin at more than 0.5 percent this quarter compared to 0.12 percent in the last.

"Its first-quarter gross margin has improved and matched my forecast, but net profit was below consensus because it's still paying for the restructuring costs," said Fubon Securities analyst Arthur Liao.

Liao sees Acer's profit picking up from the third quarter, benefitting from new ultrabook models, and forecast gross margin rising to 9.7 percent in the second quarter from 9.4 percent with revenue increasing 5-7 percent.

Acer's shares fell 1.33 percent on Thursday compared to the broader market's 0.55 percent fall.

(Reporting by Clare Jim; Editing by Jonathan Standing and Matt Driskill)

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