Acer sees profit in Q4 after reporting losses in previous two quarters

Acer expects ultrabooks to reach the $600 to $700 price range by the end of this year

Acer reported fourth quarter profit of US$2.4 million, a financial turnaround after the company faced back-to-back losses in the previous two quarters.

However, it's a significant drop from the US$145 million profit the Taiwanese PC vendor made in the fourth quarter of 2010. Revenue dropped more slowly, down 16 percent year on year to NT$127.7 billion (US$4.3 billion) in the fourth quarter of 2011.

Acer, once the world's third-largest PC vendor, fell to fourth place last year. Like its rivals, it faced a sluggish market brought on by global economic conditions and sales of tablets, according to research firm IDC. Acer, however, faced added difficulties following a management shakeup that involved the resignation in March of its then CEO Gianfranco Lanci. Later, in June, the company said it would lay off 300 employees to streamline operations after an audit found abnormalities in its distribution channels for Europe, Middle East and Africa.

Acer, however, is now on the "right track", said company CEO J.T. Wang during a conference call on Wednesday. Originally, the company had expected to break even in the fourth quarter. "With Q4 results I personally feel more confident," he added.

The company projects strong growth for its slim laptop product category known as ultrabooks by this year's second quarter as the devices reach the market, Wang said. These will include its Aspire S5 and 14- and 15-inch versions of its Aspire Timeline Ultra devices.

Acer President Jim Wong said ultrabook pricing will fall to $600 to $700 and also make up more than 35 percent of the company's notebook sales by the end of the year. Last October, Acer began shipping its Aspire S3 ultrabook starting at $899.

The company also said it is seeing growing demand for tablets in the $299 to $499 price range, or between what its costs to buy an Amazon Kindle Fire tablet and Apple iPad. About 10 million to 20 million tablets in that price range will be bought per year, according to the company's estimates. Last year, the company sold 2 million tablet units.

"At this stage we are able to break even, or make a small profit on tablets," Wang said.

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Michael Kan

IDG News Service
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