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Acer stock squeezed by growth target reduction

TAIPEI -- Shares of Acer Inc., one of the world's leading personal computer vendors, came under heavy pressure after the company lowered its 2012 PC shipment growth target in reflection of weaker-than-expected global demand, dealers said.

The stock encountered sell-off by foreign institutional investors who rushed to unload large-cap firms due to further volatility in the global financial markets amid lingering concerns over the economic fundamentals, dealers said.

As of 11:15 a.m., shares of Acer had dropped 2.52 percent to NT$29.05 (US$0.97) with 13.99 million shares changing hands, while the weighted index was down 0.13 percent at 7,122.00 points.

“Europe serves as the largest sales source for Acer,” Grand Cathay Securities analyst Mars Hsu said. “The debt problems in the eurozone have badly hurt the European economy and dragged down demand for high-tech devices in the region.”

In the first quarter of the year, the Europe, Middle East and African accounted for 37 percent of Acer's total sales.

Acer announced Thursday that it had cut its 2012 PC shipment growth target from 10 percent to a range between zero and 5 percent, citing slower-than-expected demand.

The PC vendor also projected lower-than-anticipated sales and a worse-than-expected operating margin for the second quarter.

For the third quarter, PC shipments are expected to change little from the previous quarter or rise by 5 percent at the most, Acer said.

In late April, Acer Chairman J.T. Wang forecast a slight sales increase in the second quarter from the NT$113.04 billion reported in the first quarter. He projected a 0.5 percent operating margin for the April-June period, a quarterly increase of 0.1 percent.

“The downgrade in the PC shipment growth target could not come at a worse time since the global financial markets have been haunted by economy concerns,” Hsu said.

“That's why Acer is faced with tremendous selling pressure, and I suspect the selling is coming from foreign institutional investors,” Hsu said, referring to the large trading volume.

On Thursday, foreign institutional investors sold a net 4.48 million Acer shares on the Taiwan Stock Exchange.

Hsu said he is very cautious about whether the launch of Microsoft's Windows 8 operating system in the fourth quarter will significantly boost buying interest in PCs, as the market expects.

“Even if PCs bundled with Windows 8 lure many consumers, Acer's sales in the fourth quarter will not be strong enough to make up for the slow shipments in the first three quarters,” Hsu said.

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