Acer's notebook business bombs

Acer announced some dismal results after a tough time with its laptop business, though pointed to a brighter future once the tablet boom passes.

Results for the second quarter saw a steep decline of consolidated revenues of $3.5 billion, a 32 percent drop year on year.  Operating losses were $246 million, and profit after tax dropped by $236 million.

This means Acer’s first quarterly loss, leading to an acknowledgement that it would be “impossible” to operate at a profit for the year as its cheap laptop strategy went to pot in face of the tablet’s popularity.

Despite this, the firm is expecting to see a slight improvement in performance in the next two quarters.

Acer lays partial blame for the poor results on a downsizing of channel inventory due to lacklustre economies in Europe and the US, writes Digitimes.

Forking out large severance payments also contributed to results which were overall far worse than expected.

But the main reason has to be that Acer has been rocked by the meteoric rise of the tablets, with the notebook market in general taking a hit. 

However, Acer chairman JT Wang thinks there is an end in sight.  He reckons that the tablet fervour which has gripped many is now on the wane.

Of course try telling that to the legions of rabid Apple fans awaiting the release of the iPad 3.

But with Windows 8 in the pipeline and a host of Intel Ultrabooks on their way, including one from Acer, there may be some good times on the horizon.

As well as Acer and Asustek which have Ultrabooks on their way in September, there are currently many others about to launch their own, such as Toshiba, Lenovo and Dell.

Ultrabooks are not expected to take hold firmly this year, though, and it won’t be until next year that they should be making up a healthy portion of laptops being shipped. Wang is also eyeing up a back to school 2012 boom on the back of Windows 8.

So with the Acer chairman predicting quite a long wait before conditions are right for a turnaround, claiming an imminent market saturation of tablets may just be a canny ploy to buy time.

But there is at least some truth in his claims. As Wang pointed out, and has been pointed out on many occasions, tablets are big on consumption, less so on creation of content.

As Digitimes market sources claim, it is unlikely that once the tablet market reaches saturation there will then be equal motivation to replace the hardware on a regular basis in the way that notebooks are.

Whether this is the reality is yet to be seen, but for Wang it would certainly be handy if a cooling down on tablets came sooner rather than later.