Bloomberg News

Acer to Turn Profitable in Quarter After Clearing Inventory

November 30, 2011

(Updates with share price in the fourth paragraph.)

Nov. 30 (Bloomberg) -- Acer Inc., the world’s fourth- largest computer maker, will return to profit this quarter as it no longer has the excess inventory problems which led to losses in the prior two periods, President Jim Wong said today.

Shipments of Ultrabooks, its thin and light notebooks, will be 250,000 to 300,000 units this quarter, meeting expectations, Wong said in Taipei, where Acer is based. Ultrabook sales won’t be affected by the floods in Thailand because hard disks used in those models are mostly made in China, he said.

Acer, which had risen to be the world’s second-largest computer maker, has lost money and market share for the past two quarters amid stiffer competition and inventory write-offs in Europe. Investments in China, the world’s largest computer market, will help Acer climb to second spot among notebook makers there next year from fourth currently, Wong said.

Shares of Acer rose 0.3 percent to NT$33.50 at the close in Taipei, stemming its decline this year to 63 percent. The benchmark Taiex index has dropped 23 percent in the period.

Acer is expected to post a loss of NT$102 million this quarter, according to the average of 13 analysts’ estimates compiled since it reported third-quarter earnings on Oct. 21. Six of the analysts project a loss for the period and seven expect a profit, according to data compiled by Bloomberg.

Floods in Thailand will cause a 10 percent to 15 percent global shortage of hard disk drives, with Acer able to cope with the problem because its suppliers have inventories of the components, Wong said.

“Abnormalities in terms of channel inventory stored in freight forwarders’ warehouses” prompted Acer on June 1 to announce it would cut 300 jobs and take a $150 million inventory write-off in the Europe, Middle East and Africa region.

Stockpiles have more than halved to about 30 days from as much as 80 days of inventory, while the company may also raise prices by up to 3 percent to tackle higher costs after the floods in Thailand, spokesman Henry Wang said yesterday.

--Editors: Subramaniam Sharma, Suresh Seshadri.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.


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