Acer Ups Sales Forecast, Sees Small PC Boom

TAIPEI (Reuters) – Taiwan’s Acer Inc. said on Tuesday its sales will grow by more than 50 percent this year,
raising its previous forecast as demand for laptops grows despite
consumers feeling the pinch from an economic slowdown and rising fuel
and food prices.

The world No.3 PC vendor said that smaller, cheaper laptops are
seeing significant growth from emerging markets, such as China and
India, and as many consumers buy additional computers that can connect
to the Internet for home and travel.

"The notebook market is growing for at least the next two to three
years, and with the entry of new mobile internet devices, the market
can easily double in size, changing the profile of the industry
dramatically," Acer President Gianfranco Lanci told Reuters in an
interview.

"I think all the major PC brands are getting ready to face the change and to manage the change," said Lanci.

Competing against Lenovo, Hewlett-Packard, and Dell Inc.,
Acer has expanded into fast-growing consumer markets, such as China,
India, Russia, Latin America, and the Middle East, and Lanci said the
firm could take up 16-18 percent of the global PC market by year end.

To diversify its product line, Acer launched a lightweight 9-inch
Aspire One laptop on Tuesday during this year’s Computex, the world’s
second largest computer show, following popular reception for such
models from smaller local rival Asustek Computer.

Dell and HP are also expected to launch similar PCs in the second
half of this year, and competition could soon heat up as more PC
companies enter the race, analysts said.

Acer’s Lanci said the company expects to sell 6-7 million units of
Aspire One this year, priced at $399-$499, and 15-20 million units in
2009, as the global low-cost PC market looks set to hit 40-45 million
units next year.

But many analysts expressed concern that the new less expensive and portable PCs could cannibalize the regular laptop market.

"In my view they are two separate markets and it (smaller low-cost
PCs) will not eat into the regular notebook market — it will only
expand the business," said Lanci.

Lanci also added that the company was on track to ship 25-30 million
PCs this year, up from 20-21 million last year, excluding the new
low-cost models, as consumer demand remained robust in markets like
Europe.

Taiwan’s Acer, which bought U.S. computer brand Gateway Inc and
Paris-based Packard Bell, dethroned Lenovo last year as the third
largest PC brand in the world, grabbing market share through the
acquisitions.

Forecasts from 18 analysts on Reuters Estimates showed that Acer
would gain a net profit of T$12.67 billion ($419 million) this year,
slightly lower than T$12.96 billion a year ago.

"Our forecasted full year earnings are above consensus since we are
more optimistic about Acer’s prospects for profitability and growth,
and we prefer companies with greater scope as well as those leveraging
off emerging market growth," said Nomura International analyst Ellen
Tseng, who rates Acer at "buy".

On Tuesday, Acer shares fell 1.9 percent to T$63.10, while the main
TAIEX index ended down 1.7 percent. So far this year, its shares have
slipped about 2 percent, underperforming the big board’s 1 percent gain.

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