Acer Surprises with Net loss on More Spending

TAIPEI–Taiwan personal computer maker Acer Inc. posted a surprise on-year net loss for the second-quarter because it spent more on industrial design even as sales fell on declining world-wide demand for laptops.

Net loss was 343 million New Taiwan dollars (US$11.4 million) compared with a net profit of NT$56 million. A median forecast of 16 analysts polled earlier by Thomson ONE Analytics was for a net profit of NT$206.07 million.

“The operating loss was largely due to increasing expenses on investments to strengthen company’s industrial design capability and the declining gross margin due to DRAM’s price hike,” the company said in a statement.

Consolidated revenue was NT$89.38 billion down from NT$110.5 billion. Operating margin was -0.7% compared to 0.03% in the first quarter and 0.4% in the second quarter of 2012.

“Acer is suffering because of its product mix,” Fubon Financial analyst Arthur Liao said. “You have to sell a lot of low-cost tablets to offset the revenue decline from falling PC demand.”

Acer is phasing out the once-popular netbooks–contributing to its world-wide PC market share sliding to 8.3% on year in the second quarter from 11.4%, according to research company Gartner.

Acer has been spending more on marketing and research in spite of revenue declines. The company has been selling more low-cost Android tablets this year but this hasn’t offset the decline in laptops, according to research company Gartner.

The world’s fourth-largest PC maker has been affected more than competitors by the downturn in the industry. Most of its sales are in the consumer market rather than the more-stable corporate market. World-wide PC shipments fell 10.9 percent in the second quarter from a year earlier as consumers turn to cheaper mobile devices like smartphones and tablets, according to Gartner.

Source: Market Watch