Acer Lowers Shipment Growth Expectations; Swings to 2Q Net Profit
08/17/2012| 06:42am US/Eastern
-- Acer swings to second-quarter net profit, but warns of weaker-than-expected 2H growth in PC shipment
--Acer unlikely to meet fourth quarter operating margin target
-- Intense competition and sluggish consumer demand to continue weighing on Acer
(Rewrites throughout, adds executive's comments in 1st, 3rd, 11th-12th paragraphs, details of guidance in 4th paragraph, analysts' comments in 4th paragraph)
By Eva Dou and Lorraine Luk
TAIPEI--Taiwanese personal computer maker Acer Inc. (>> Acer Incorporated) warned of weaker-than-expected shipment growth in the second half, as hopes dim that the new Windows operating system will bring stellar sales for struggling personal computer makers, its chief executive said Friday.
The cautious comments come after Acer swung to a net profit in the second quarter, but the company continues to face a weak global economy and stiff competition from Apple Inc.'s (>> Apple Inc.) iPad and other tablets.
"Originally, we were expecting very high-growth (in the) second half, but I think because of the global economic situation, and the uncertainty of the Windows ecosystem, the big growth expectation may turn out to (be for) medium growth," said Chief Executive J.T. Wang in an investor call.
Acer guided for flattish sequential shipment growth in the third quarter and 5%-10% sequential growth in the fourth quarter. Analysts attribute a slack third quarter outlook to intensifying competition and delayed PC purchases ahead of the launch of Windows 8.
Last month, Acer cut its 2012 growth forecast for total notebook shipments, tablets and smartphones to 0-5% from 10% as the euro-zone debt crisis and global economic uncertainties weigh on consumer demand.
The revised guidance mirrors the poor outlook in the broader PC industry. Global shipments of PCs fell 0.1% in the second quarter from a year earlier, according to Gartner Inc. and International Data Corp., despite heavy marketing by Intel Corp. (>> Intel Corporation) and PC makers to promote a new breed of sleek notebook computers called Ultrabooks.
Acer is the world's third-largest personal computer maker by shipments after Hewlett-Packard Co. and Lenovo, according to Gartner.
The company said its second-quarter net profit was 56 million New Taiwan dollars (US$1.9 million), compared with a net loss of NT$6.8 billion in the second quarter of 2011, when it reported a US$150 million inventory write-off and corporate restructuring, including the departure of former chief executive Gianfranco Lanci. Acer said a one-time tax settlement of NT$410 million (US$13.71 million) in Europe also weighed on its second-quarter profit, but didn't elaborate.
The latest result was below the average NT$382.67 million net profit forecast of six analysts polled by Dow Jones Newswires.
Second-quarter revenue rose 8.3% to NT$110.6 billion but fell 2.2% from the first quarter as unfavorable economic conditions sapped consumer demand in second quarter, the company said.
Mr. Wang also said Acer is unlikely to meet its 2% operating profit margin target for the fourth quarter as it dials down its expectations that the new Windows operating system will boost its sales. Acer now expects its operating margin to improve to 1%-1.5% next year.
Acer's second-quarter operating margin was 0.4%, up from 0.1% in the first quarter, it said.
Analysts said Acer is fighting an uphill battle in the already-shrinking PC sector, particularly in Europe, its largest market, where Hewlett-Packard Co, Lenovo Group Ltd. and Asustek Computer Inc. are much more aggressive in marketing and sales.
Write to Eva Dou at email@example.com and Lorraine Luk at firstname.lastname@example.org