Personal Finance

PC investors want more earnings surprises

(China Daily/Agencies)
Updated: 2009-10-29 08:19

With a recovery well underway in the personal computer market, investors are keen to find out if some Asian companies are able to hold onto profit margins while boosting sales at the expense of global rivals.

Acer, based in Taiwan island, which surpassed Dell to become the world's No 2 PC maker in the third quarter, driven by surging sales of low-cost netbooks, has emerged the clear winner so far.

Analysts expect smaller rival Lenovo, the world's No 4 PC brand, to swing back to the black after three straight quarters of red ink, supported by an ambitious cost-cutting plan and growing demand for its products in its home market.

"On a fundamental level, things are looking good for PC firms, with revenues traditionally peaking at this time of the year," said Robyn Hsu, who manages more than NT$28 billion ($867 million) at Capital Investment Trust.

"The big question right now is whether or not these gains have already been priced in," said Hsu, whose portfolio also includes PC-related shares.

Lenovo shares have surged over 120 percent so far this year, beating the 50 percent rise on the benchmark Hang Seng index. Acer has jumped more than 90 percent, outperforming a 70 percent gain in Taiwan's main index.

Analysts said contract laptop PC makers Quanta and Compal, which manufacture products for top brands such as Hewlett-Packard and Dell, are also set to report robust results ahead of the year-end shopping season.

The laptop PC makers together manufacture more than half of all the world's portable PCs, and markets focus on their results and outlook for clues to the overall health of the PC industry.

Windows boost

Last week's launch of Microsoft's Windows 7, its most important release for more than a decade, is also expected to give a further lift to PC sales.

The chairmen of both Acer and Lenovo said they expect Microsoft's Windows 7 software, to boost PC sales as consumers look to replace the Vista or the eight-year-old XP system.

Acer has already said its third-quarter net profit could reach NT$3.45 billion, up 13 percent from a year ago, and representing an operating profit margin of about 2.8 percent.

Acer Chairman J.T. Wang told Reuters last week the company aims to boost revenue by more than 70 percent over the next three years.