Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Wednesday, August 30, 2006

Acer Results Confirm PC Slowdown


Acer of Taiwan, the fourth largest PC company in the world, issued results that global computer sales are no longer accelerating at the rate that he industry has come to expect. The company's second quarter operating income fellfell 8.6% to $46.2 million. According to the Associated Press, this was the lowest operated income for any quarter since 2002.

The company blamed the poor results on "aggressive PC price war and a worldwide notebook market slowdown."

This can hardly be considered good news for Dell, HP's PC division, or Gateway, which is in the midst of a takeover struggle. Acer's main base is in Asia, an area that US PC companies have targeted for growth as the domestic market slows. The promise of those markets now seem less spectacular.

It would appear that the Acer results confirm that any uptick in the PC market is not just around the corner. This is not terribly good news for Intel or AMD, both of which supply the chips at the heart of almost every PC sold in the world. It also does not bode well for Apple's Mac line which may have to take up some of the slack from the recently beleaguered iPod which is faced stiff competition from both Microsoft and Sandisk.

It may take the launch of Microsoft's Vista operating system to drive a move up in PC sales. If so, it will be well into 2007 before the manufacturers and chip companies see relief.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger