Acer expects double ultrabook shipments in 2Q12

Acer has announced results for 2011 with operating profit turning from losses to gains in the fourth quarter of 2011, while company chairman JT Wang pointed out that gross margin will increase each quarter in the first half of 2012 with shipments of ultrabooks to also double in the second quarter.

Acer has announced consolidated revenues of NT$127.7 billion (US$4.2 billion) for the fourth quarter of 2011, up 8.3% on quarter, while operating income was NT$0.1 billion, profit after tax (PAT) was NT$0.1 billion and EPS was NT$0.03. These numbers represent a turnaround to profit for Acer after back-to-back losses in the second and third quarter of 2011.

Despite that the notebook industry suffered a serious hard drive shortage in the fourth quarter of 2011, Acer's product and inventory management helped the company to successfully achieve profits, and despite the company's revenues and shipments in the first quarter of 2012 are estimated to be lower than the previous quarter, profitability may rise, Wang noted.

Wang also cited figures from Gartner and pointed out that Acer has already changed its strategy and is no longer stuffing inventory to its retail channel partners; however, its shipments still achieved growth in the fourth quarter of 2011 with its global PC market share rising to 10.8% from 10.4% in the third, indicating that Acer is back on the road of growth. Acer achieved a gross margin of 9.2% in the fourth quarter of 2011 and is expected to return back to 10% by the end of 2012, Wang added.

Acer president Jim Wong also noted that the company's operating expense ratio is estimated at around 7.5-8%, with expenses used for marketing and R&D to rise another 1pp.

As for ultrabooks, Wang pointed out that Acer will launch four new models in the second quarter – S3, S5 and Timeline Ultra 14 and 15 – with shipment volumes to double from the first quarter. Acer estimated its ultrabook shipments in the first quarter will stay flat on quarter at 250,000-300,000 units.

Since ultrabooks have better gross margins than traditional notebooks, Wong pointed out that notebook vendors will avoid dropping ultrabook prices too fast; however, he estimated that ultrabooks will reach the US$600-700 price range in the fourth quarter, at the soonest.

As for tablet PCs, Acer shipped about two million units in 2011, but has turned conservative over the product line for 2012 and will launch products with prices between US$299-499. The company also estimated annual tablet PC demand at between 10-20 million units.

In 2011, Acer's preliminary consolidated revenues were NT$475.5 billion (US$15.7 billion), declining 24.4% on year. Mainly due to the one-time write-off in EMEA in the second quarter, Acer's annual operating loss reached NT$6.4 billion (US$212 million), PAT was negative NT$6.6 billion (negative US$219 million), and EPS was negative NT$2.52.

During the fourth quarter of 2011, Acer's consolidated revenues declined 14.4% and operating income decreased 98.4%, in comparison to the same period of 2010.