Taiwan's Acer Inc. hasn't become the world's second-largest personal computer manufacturer for nothing. In its most recent quarter, the company announced that it attained its highest profit in almost three years, mostly at the expense of the company it recently displaced from the number two spot, Dell (DELL). It is still behind global computer leader Hewlett-Packard (HPQ).
At the same time it has grown shipments, it has kept an eye on profits, which is impressive. In general, rapid market share gains means margin cuts, but not here. Acer, which just four years ago seemed in disarray as it tried to find out why it was being beaten in the PC game, has apparently figured it out.
In addition to taking the lead last year in the hot netbook computer category, the company's Gateway brand has evolved into a stylish yet low-cost retail alternative to the boring offerings from Dell and others. Its Q4 net income increased to $109 million, a 25% gain from the year-ago period. At the same time, Dell saw a 54% drop in profit on the back of a 15% drop in sales for its October quarter.
What else is Acer doing? Prepping for another good year in notebook computer sales. Its three retail brands -- eMachines, Acer and Gateway -- are poised to grab a good share of the retail market again in 2010, filling in all the brand and price holes in the general notebook PC market. HP isn't sitting idly by, though. The world's largest PC maker has all the style and price point angles covered itself, although not as price-sensitive as its Taiwan-based competitor. Although Dell's entrance into the retail market over two years ago has proven quite fruitful, the company is still struggling with any momentum it has. Meanwhile, Acer is ensuring that Dell keeps itself walking on eggshells while it rakes up excellent earnings.
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