Acer Chairman sees year-end boom in PC demand

By Wong Choon Mei

PANGKOR : Acer, Taiwan's biggest PC maker, said on Sunday it was sticking to its 2002 full-year profit forecast and expected a boom in year-end demand despite recent signs of market weakness. Stan Shih, Acer's chairman, told Reuters that August sales of personal computers were "not that good", but inventory levels were now very low and buyers might return to the market by as early as next month.

He said many big customers held back orders because of uncertainty in the industry, which is still in the midst of a patchy recovery. "It's not that there's no demand, demand has been delayed," said Shih, who was attending an international conference at the Malaysian resort island of Pangkor Laut.

"The lead-time for the fourth quarter is getting shorter and shorter. They all need to order soon, so orders could shoot up in October or November." Acer counts heavyweights like IBM and Dell Computer as among its clients.

Weak demand from key U.S. clients has seen Taiwan's top technology firms report weak earnings, prompting analysts to warn that lacklustre sales might last through the peak export season. Taiwan manufacturing usually heats up in the second half of the year ahead of the year-end holiday season in Europe and top export destination the United States.

Last month, Acer reported a 92 percent plunge in second-quarter profit over the first quarter, stoking fears the earnings hole might be too big to climb out of in coming months. Acer forecasts net profits of T$10.6 billion ($317 million) or T$5.04 per share on sales of T52.2 billion in 2002.

Shih said Acer was on target to meet its earnings forecast but would rely more on exceptional gains from selling investments in related companies rather than from its PC operations. "We will depend on sales of shares in associated companies for 2002 profit, not so much from business," Shih said.

Shih said he expected higher PC sales in 2003, boosted by demand for its tablet PC and a revamp following a split of Acer's own-brand business from its contract manufacturing activities. Acer's own-brand business has been in the red since 1984 when it aggressively entered the U.S. market, forcing the firm to rely on contract manufacturing for profits.

Acer unit Wistron now handles the group's contract manufacturing business, leaving the parent firm free to focus on building up market share for its own products. Shih also said Acer planned to take a second stab at the competitive U.S. market, banking on growing popularity of its latest tablet PC.

"We are going to focus on the U.S. next year," Shih said. "We are one of the leaders in the tablet PC market and that's the product of the future."

© Reuters