Acer expects tablets to help growth this year

The PC maker said hit a slow patch due to a dip in demand and management changes

Acer, the world's second largest PC maker, saw its revenue slump in the first quarter following a management shakeup and what it described as a seasonal lull in demand. The Taiwanese manufacturer is now counting on tablets to boost overall sales.

Its first-quarter revenue of NT$127.8 billion (US$4.45 billion) was down 21.2 percent over the same period last year. The company’s gross profit also fell by 15.9 percent to NT$13.21 billion. Its net profit figures were not available.

The slide at the company is expected to continue through the first half, as shipments are expected to drop by 10 percent in the current quarter, the company said earlier this month. It expects improvements later in the year, driven largely by sales of its tablets.

The departure of CEO and President Gianfranco Lanci in March over business disputes with the board of directors, and a normal seasonal slowdown in the PC industry have contributed to the early-year slowdown, the company said during an investor conference on Thursday.

"The second quarter marks the new management team's arrival, so we believe that in this period we want to be especially cautious," Acer Chairman and CEO, J.T. Wang, told investors. "I hope everyone will give the new management team a new chance."

Competition from tablets is affecting the company’s laptop sales, according to analysts. Laptops accounted for 66 percent of Acer’s revenue in the first quarter.

Compal Electronics, one of the world's biggest contract makers of portable PCs, has estimated that its notebook shipments would drop from a previous projection of 50 to 55 million to 48 million as laptops are "cannibalized" by tablets, a company spokesman said Thursday.

Acer anticipates shipments of around 7 million tablets this year, some of them running on Google's Android 3.0 operating system. This will help Acer's revenue grow along with broad market trends, company officials said at the investor conference.

"Gross margins for tablets and smartphones, if we do them well, should be better than those for PCs," Wang said.

Acer released its first Android 3.0 tablet in the U.S. this month and has received good reviews, the company said.

Shipments for all brands of tablets and other mobile Internet devices, excluding smartphones, totaled 14.16 million last year, and will grow to 32.93 million this year, 59.68 million in 2012 and 150.13 million by 2015, according to estimates from market research firm Ovum.

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Ralph Jennings

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