Acer aims for NT$400 billion sales in 2006

Acer Inc., the world's fourth largest PC vendor, believes it can keep up the breakneck growth it's seen in the past few years, forecasting NT$400 billion (US$12.27 billion) in sales this year.

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Acer released the sales forecast late Wednesday, when it issued its full year 2005 financial results. The Taiwanese company's sales last year rose 41 percent year-on-year to NT$318.1 billion, while its net profit rose 21 percent to NT$8.48 billion. It was a record year for Acer in terms of sales.

The company wants to move up in global PC rankings and trump China's largest PC seller, Lenovo Group Ltd. Last year, Acer's PC shipments rose 58.1 percent over 2004, while Lenovo's grew only 16.4 percent, according to market researcher Gartner Inc. The Chinese PC maker holds third place with a 6.9 percent share of the global market, compared to Acer's 4.6 percent.

Acer has benefitted from strong laptop sales, particularly in Europe, and has credited its close relationship with distributors as a key reason for its success in recent years. It's brisk growth rate last year left other PC vendors far behind. By comparison, Dell Inc., the largest PC company, increased its shipments 18.6 percent last year, while Hewlett-Packard Co. shipped 15.1 percent more PCs in 2005 than it did in 2004, according to Gartner.

The company's financial forecast of NT$400 billion would mark 26 percent sales growth over last year, and would also be a record for Acer. A new push into the U.S. market as well as continued strength in laptop sales are expected to help the company hit its targets this year.

A less friendly market could hold Acer back this year. PC shipments are expected to slow this year, up only 10.7 percent to 234.5 million units compared to the 15.5 percent increase in 2005, according to Gartner. Last year, 211.8 million PCs were shipped globally, the researcher said.

In addition, cutthroat competition could cause price wars among PC vendors, which is great for users but would hurt Acer's chances to reach its goal.

"We expect the PC price war to intensify in the second quarter as Dell joins the battle, (and) we believe all (PC vendors), including Acer, will continue to suffer from declining average selling prices and margin erosion," said Henry King, executive director of Asia-Pacific research for Goldman Sachs in Taipei, in a Thursday report.