Found this interesting, "A new business model is evolving...PC sales margins are becoming smaller. But if you are able to generate follow-up revenue and maintain life-long relationships with customers, the margins will benefit," he said.
FOCUS-Acer <ACER.SI> sees future in IT products
By Angela Tan
SINGAPORE, Aug 13 (Reuters) - Acer Computer International Ltd (ACI) reported interim earnings that exceeded analysts' forecast on Friday for the full year and Chairman William Lu expects to maintain performance in the second half year.
Personal computer (PC) distributor ACI, a unit of Taiwan's Acer Inc <2306.TW>, revealed a 23-fold increase in its interim net profits to S$8.62 million.
Barra Global Estimates has a net profit consensus forecast of US$1.9 million (S$3.17 million) for the full year.
"Barring unforeseen circumstances, the directors anticipate financial results for second half 1999 to be approximately in line with first half results," Lu told a news conference.
Turnover at half time rose 19.6 percent to S$710.23 million due to better notebook and server sales.
Narrower losses from its 35.9 percent-owned Latin American associate Acer Computec Latino America <ACERLA.MX> also pumped up the bottomline.
ACI's share of loss from Acer Computec was at S$4.5 million for the six months ended June 30, 1999 against S$7.7 million a year earlier.
Acer Computec was expected to break even by the fourth quarter this year, Lu said.
In an era where PCs were becoming cheaper and margins from selling PCs fast eroding, the money for ACI, was in information technology (IT) appliance products that were being shaped by the growth in Internet.
"We don't emphasise anymore that we are a PC company but a customer-centric company...ACI plans to become a leading IT appliance company," Lu said.
"A new business model is evolving...PC sales margins are becoming smaller. But if you are able to generate follow-up revenue and maintain life-long relationships with customers, the margins will benefit," he said.
The new products included cyber-inspired television, set-up boxes, videos and handphones as well as Internet-linked services.
But it would take two to three years before they would be significant revenue generators, Lu said.
Lu declined to indicate ACI's growth margin, except to say margins for PC companies ranged from 20 to 25 percent, with Dell Computer <DELL.O> leading the pack with 25 percent. Acer's shares closed at US$0.79, up four cents on Friday.
The shares, which have risen only 50 percent since the start of the year, have underperformed the electronics index which rose 54 percent.
((Singapore newsroom: (65) 870-3080; Fax (65)776-8112; email: singaporenewsroom@reuters.com))
REUTERS
Rtr 08:43 08-13-99
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