Acer expects to triple mobile phone output in 2001
By Bloomberg News
November 3, 2000, 10:25 a.m. PT
TAIPEI, Taiwan--Acer Communications & Multimedia will triple production next year to meet demand from China and customers such as Motorola, the world's No. 2 mobile phone maker.
Acer Communications said Friday it expects to make about 15 million handsets in 2001, up from 5 million this year, company president Lee Kuen-yao said. Profit margins will stay ''at the current level" of about 12 percent, he added.
The higher production may not boost earnings, however. Acer Communications may not be able to meet this year's forecast for net income of $155.5 million (NT$5 billion), said chief financial officer Eric Yu. Earnings will surpass $124 million, he added, declining to be more specific.
Acer and other Taiwanese electronics companies such as Quanta Computer and DBTEL make phones for larger mobile phone companies seeking to cut costs. The market for such low-end handsets is growing in China and the rest of Asia.
Although the Acer unit based its production forecast on orders already in hand, some analysts remain skeptical. Smaller rivals aim to boost market share by selling phones at little or no profit.
''If (Acer) can get 10 million phones, that would be very optimistic,'' said Frank Li, an analyst at Indosuez W.I. Carr Securities. ''The key thing is profitability, and we're not sure how that's going to play out.''
Acer said stronger demand for mobile phones in China was one reason for increased orders. Acer Communications is a subcontractor for Motorola and other name-brand mobile phone makers. The company is a unit of Acer, Taiwan's largest computer maker.
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