Acer to protect margins, sees sales jump

By Phil Smith and Kelvin Soh

TAIPEI (Reuters) - Acer (2353.TW), the world's No. 2 PC maker, aims to boost revenue by more than 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 the growth is set to come from low-cost netbook PCs, which Taiwan's Acer expects to jump over 50 percent in 2010, Chairman J.T. Wang said, citing an improving global economy and a shift to selling smaller, more mobile PCs for the explosive growth.

Acer was the fastest-growing PC brand in the third quarter, shipping over 25 percent more units than it did a year ago and outperforming Hewlett-Packard (HPQ.N), Lenovo (0992.HK) and Toshiba (6502.T), according to industry tracker IDC.

"The idea is to reach $30 billion as soon as possible," Wang told Reuters in his first public comments since Acer beat Dell (DELL.O) to become the No. 2 PC maker in the third quarter.

"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," Wang, who's been with the company for 28 years, said in an interview.

Wang joined Acer's predecessor Multitech as a sales engineer in 1981, and took over as chairman in 2005 after the company's founder Stan Shih retired.

"Acer's seeing very strong growth, and is likely to outperform the market in the long run," said Michael On, managing director of Beyond Asset Management with some $60 million under management but does not own Acer shares in its portfolio.

"But $30 billion sounds like a very ambitious target, and it's probably a best-case scenario they're predicting."

Acer's revenue is expected to increase to T$573 billion ($18 billion) this year, rising to T$821 billion ($25 billion) in 2012, according to 22 analysts polled by Thomson Reuters I/B/E/S.

Acer, Taiwan's best known brand, has transformed itself from being a contract manufacturer of laptop PCs for global brands.

The company commanded about 14 percent of the global PC market in the third quarter, coming second only to HP's over 20 percent share, according to IDC.

Acer expects to ship about 12 million low-cost netbook PCs this year, and is currently the biggest player in the field pioneered by crosstown rival Asustek (2357.TW) in 2007. About 26 million netbook PCs are expected to be sold this year, IDC said in June.

Acer shares have jumped about 94 percent so far this year, outperforming HP and Dell, which rose 32 and 48 percent, respectively.

HOLDING ONTO MARGINS

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 demand for technology products increases.