August 17, 2012 / 8:10 AM / in 5 years

UPDATE 2-Acer Q2 net lags forecast, warns industry growth to slow

TAIPEI, Aug 17 (Reuters) - Taiwan’s Acer Inc posted on Friday a second-quarter net profit much worse than analysts had forecast after it made a one-time tax settlement in Europe and warned the PC industry will see slower-than-expected growth in the second half due to the uncertainty of the Windows 8 ecosystem.

The world’s No.3 PC vendor by shipments has been betting on Microsoft new Windows 8 operating system and Intel’s ultrabooks, super-thin laptops similar to Apple Inc’s MacBook Air, to revive sales as tablet computers chip away at the PC’s dominance.

Acer forecast revenue in the third quarter would be flat, but said fourth-quarter revenue should grow 5-10 percent.

“We originally expected high growth in the second half, but because of the global economic situation and the uncertainty of the Windows 8 ecosystem, the big growth expectation turned out to be medium growth,” Acer’s chairman and CEO, J.T. Wang, told investors on a conference call.

He said customers have been cautious towards the Windows 8 product launch, which translated into a lack of “explosive growth” in the market.

Acer was one of the first companies to criticise Microsoft for moving into the computer hardware business with the pending launch of its Surface tablet computer.

Wang said Microsoft’s move would have a negative impact on the software giant’s hardware partners and said he doubted Microsoft could rival Apple or other hardware makers.

Acer said on Friday its net profit in April-June was T$56 million ($1.87 million), far below the T$550 million profit forecast by 19 analysts polled by Thomson Reuters I/B/E/S.

The figure compares to a net profit of T$331 million in the first quarter and a net loss of T$$6.79 billion in the same quarter a year earlier. The company said the tax payment in Europe was for T$410 million, attributing it to an assessment discrepancy with Italian tax authorities.

The company’s operating margin climbed 0.3 percentage points to 0.4 percent from the first quarter. Acer President Jim Wong said margins will be maintained at similar levels due to ultrabook sales.

Shares of Acer slipped 0.9 percent on Friday, versus a 0.3 percent fall in the broader market.


Analysts have expressed concerns about Acer’s growth momentum through the second half as rivals such as Lenovo Group and Samsung Electronics push aggressively into Europe and as China’s PC market slows. They have also expressed concerns over Acer’s competitiveness in Windows 8 products.

JP Morgan said “Acer is likely to lag behind the competition in the Windows 8 product cycle, especially for new form factors such as tablets and convertibles...Acer notably doesn’t figure as a leading partner for Microsoft in Windows, leading to further share losses.”

The latest data by industry researcher Gartner shows Acer retained its No.2 position in the second quarter in Western Europe, a market where the Taiwanese vendor has demonstrated a strong presence with a market share of 17.3 percent, up from 14.6 percent from a year ago.

PC shipments in Western Europe declined 2.4 percent in the second quarter from a year ago, according to Gartner, while worldwide shipments were flat.

“Acer will start shipping products for the launch of Microsoft Windows 8 in August and September (and) therefore anticipates revenues to rebound,” the company said earlier in a statement.

Acer said it will introduce two models at the launch of Windows 8 and plans to roll out Windows RT - tablets based on Microsoft’s new system using ARM chip architecture early next year.

The company also said it is aiming for ultrabooks to account for 12-20 percent of notebook shipments by the end of the year.

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