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TBR: Acer charts ambitious course 4 July, 2008 Acer wasted no time in starting down the road toward its revenue goal of $20 billion for 2008; during 1Q08 the PC maker added $1 billion in sales versus the year-ago quarter. Acer's significantly expanded PC business drove the revenue gain, with a 61.1 percent year-to-year increase in unit shipments. The unit growth came from higher shipments of Acer-brand notebook PCs and contributions from the company's Gateway and Packard Bell acquisitions. TBR expects Acer to continue delivering high-double-digit year-to-year unit shipment and revenue growth throughout the remainder of 2008 as it did in 1Q08. The company has yet to show the full effect of its Packard Bell acquisition, which closed in February. Acer also continues to gain momentum in the consumer market by generating buzz with new products such as its Aspire Gemstone Blue multimedia notebook and Aspire One low-cost Netbook. As a result, TBR expects Acer to outpace the overall PC market's shipment growth of approximately 10 percent in 2008. However, we do not believe the company faces an easy task in reaching its long-term goals. After attaining revenue of $20 billion in 2008, Acer expects to increase its corporate-wide revenue to $30 billion by 2011 and attain the top position in global notebook shipments. To reach those goals, Acer will have to wrestle the notebook lead from Hewlett-Packard and fend off an increasingly aggressive Dell, whose retail expansion directly challenges Acer. Moreover, Acer's top executives expect tougher times for the PC industry as this decade comes to a close. The executives believe that on an industry-wide basis, PC average selling prices will continue to deteriorate, making it challenging to drive profits. Further, Acer management believes that consolidation in the industry will continue, while competition will make for less technological differentiation between manufacturers.
Yet Acer sees opportunity in these changes. After adding Gateway, eMachines and Packard Bell to its stable of brands, the company intends to use its broader scale and scope of products to pursue growth opportunities, while moving against HP and Dell. Acer CEO Gianfranco Lanci intends to both improve the Acer brand cache and offer significantly differentiated products within its four product brands, allowing the company to cater to a broader range of customers, particularly those in the fast-growing consumer notebook space. At the same time, the company intends to leverage consolidated design, purchasing and administrative functions to lower its operating costs as a percentage of revenue. Despite the fact that it will face resistance from Dell, HP and Lenovo, Acer intends to apply its newfound scale and scope to pursue the growth it needs to reach its goals, both in the consumer spaces of mature markets such as the United States as well as in emerging markets such as China, India and Eastern Europe. www.tbri.com
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