Acer's Profits Fall Dramatically

During the third quarter, a net profit of T$68 million ($2.32 million) was reported by Taiwanese PC maker, Acer Inc, which is well below estimates. A poll of 18 analysts by Thomson Reuters (News - Alert) I/B/E/S produced a mean estimate of T$756 million profit.

On Thursday, the company held a briefing to give more details of the earnings and its outlook however, it did not explain why its profit undershot expectations so dramatically. The figure was likely to be the result of foreign exchange losses and higher tax rates and according to one analyst, this may continue to impact the fourth quarter. 


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"The lower-than-expected net profit was due to a forex loss of over T$100 million and a higher tax rate at 34 percent; previous guidance was around 20 percent," said KGI Securities Analyst Angela Hsiang, citing her conversation with the company.

For further comment, Acer (News - Alert) was not immediately available. In the previous quarter, it also reported profit far below forecasts, which it attributed to a one-off tax issue. One year ago as it struggled with stiff competition from tablet PCs and the effects of a restructuring, the company posted a worse-than-expected net loss. The figures come as traditional PC makers are struggling to sell machines.

Many consumers, tired of confidence by global economic troubles are putting off buying new machines or switching to cheaper tablets instead. In August, Acer warned that growth in the PC industry could slow.

Compared to a year earlier of 87.5 million, worldwide shipments of personal computers fell over eight percent in the third quarter which, according to Gartner (News - Alert) analysts this is the steepest decline since 2001. From a net profit of T$56 million in the second quarter, Acer's third quarter’s profit was slightly high. It made a net loss of T$$1.1 billion in the third quarter of 2011. Before the results were announced, Acer shares closed down 0.92 percent versus the broader market's 0.48 percent decline.