Acer's performance dips into red in second quarter

PHOTO: Acer's performance dips into red in second quarter

TAIPEI - Acer Inc. yesterday announced discouraging second-quarter operating losses of NT$613 million (S$26 million) and a net loss of NT$343 million, or NT$0.13 per share, marking the first tumble into the red in two years for the company's core operations.

Second-quarter revenues reached NT$89.378, down 2.8 per cent quarter-on-quarter and 19.2 per cent year-on-year.

In the first half of this year, the company has accumulated revenues of NT$181.351 billion, down 18.9 per cent year-on-year, incurred operating losses of 585 million, yielded after-tax net income of NT$171 million and earnings of NT$0.06 per share.

In addition to unfavorable economic conditions and waning consumer demand among the major markets, Acer attributed the poor performance to increased expenditure on product industrial design to ensure long-term competency, and the surging price of DRAM components, which impacted profitability performance markedly.

Institutional investors expect Acer's performance to continue declining in the third quarter, and see promotional discounts as one its few avenues of clearing inventory. Shipments of new notebook units may recede another 5-10 per cent, according to HSBC analysts, while setting Acer's target share price at NT$19. Morgan Stanley indicated that the company's third quarter product offering faces tremendous challenge from rival Asus.

Meanwhile, Acer Chairman J.T. Wang on Tuesday expressed a positive outlook for the third quarter, citing Microsoft's renewed strategy in the form of the upcoming Windows Blue update, following tepid market reception since the launch of the Windows 8 operating system, according to reports. A number of devices equipped with displays smaller than 11.4 inches will be launched toward the end of this year, said Wang, who added that further details will be provided half a month ahead of confirm launch date.

Acer shares yesterday lost 3.97 per cent, down NT$0.85, and closed at NT$21 at the end of trading. Intraday declines expanded to NT$20.50 early in the session, the lowest seen since the company's listing in 1996.

SERVICES