Taiwan's Acer, battling China's Lenovo

Taiwan's Acer, battling China's Lenovo for the title of the world's number-three PC maker, expects to ship 25 percent more computers in 2008, taking its global market share to 11 to 12 percent.
Acer chairman JT Wang gave the forecast on Friday, a day after his company posted a rise in third-quarter profits.

Acer completed the $710m (£345m) purchase of US computer vendor Gateway last week and will book about $30m in related restructuring costs in the current quarter.

"With Gateway, we can almost double market share in the US and we'll have a different scale in terms of units and negotiation power with our vendors," Acer's president, Gianfranco Lanci, said at the firm's investor conference.

Competing head to head with Lenovo — behind US heavyweights Dell and HP — Acer posted a better-than-expected 58 percent rise in quarterly profits on the back of strong laptop demand from emerging and mature markets.

Lanci said it has not seen any slowdown in demand for the PC market in the fourth quarter, and added that notebook demand has been good for Acer in all regions.

Fourth-quarter shipments will be more than 10 percent above the third quarter, while shipments should reach 25 million PCs next year, said Lanci.

Acer has been experiencing some delays in getting plastic materials and mechanical parts but no major supply shortages, the company said.

Battling for third place
Acer and Lenovo have been neck and neck in market share but analysts said Acer, worth about $5.2bn, has probably claimed the number-three spot after its acquisition of Gateway.

"In the longer term, we believe Acer can benefit from compelling cost synergies from the Gateway acquisition to drive its margin expansion," said Goldman Sachs analyst Henry King, who has a buy rating on Acer.

Lanci said average selling prices of Acer's notebook computers are about $700 per unit and that the prices could decline five to 10 percent next year.


Acer earned a net profit of $90m for its third quarter ended September, higher than $56.9m a year ago and beating the market's forecast of $69.58m, according to seven analysts on Reuters Estimates.

Third-quarter consolidated revenue reached $3.75bn, up 29 percent year on year and 30 percent from the previous quarter.

According to Reuters Estimates, Acer is expected to post a net profit of $379.6m for 2007, 21 percent higher than the $314.6m earned in 2006.

In Taipei, Acer shares closed 1.1 percent higher at 73.20 Taiwan dollars (£28.73) on Friday, outperforming the benchmark Taiex index, which gained 0.7 percent.

Year to date, Acer's stock has gained nine percent, lagging a 23 percent rise on the Taiex, while Lenovo's stock has more than doubled, beating the Hang Seng Index's 52 percent rise.
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