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Acer rides little netbooks to big profit

38 per cent growth

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The ongoing global Meldown isn't melting everyone, as Taiwan's Acer demonstrated in its 2008 financial results, released Tuesday.

In fact, 2008 was a growth year for the world's third-largest PC maker, with operating income up a hefty 38 per cent from 2007: income was $428.8m (£299.8m) in 2008, up from $310.3m (£217m) in 2007. Revenue growth supported that increase, from $14.08bn (£9.84bn) in 2007 to $16.65bn (£11.64bn) in 2008 - a 15 per cent increase

Even during the painful fourth quarter of 2008, Acer's income rose from the same period in 2007. Income in Q4 2008 was $121.1m (£84.6m), up from $105.7m (£73.8m) in Q4 2007 - a 14.5 per cent increase.

There's a one-word summary of Acer's success: netbooks.

While there may be some debate about exactly what a netbook is when compared to a subnotebook or ultra-portable, there's little disagreement that the compact, low-power laptops are hot sellers these days.

In Q4 of 2008, for example, netbooks accounted for 20 per cent of European notebook sales. A recent survey by price-comparison site PriceGrabber showed netbook sales to be on the rise, with 10 per cent of online buyers owning a netbook, and nearly 20 per cent of mobile PCs being sought in December 2008 being netbooks.

Acer predicts that they'll sell 12 to 13 million netbooks in 2009, and their rival Asus projects another 7 million or so. If they and their competitors can maintain their respective market shares, netbook sales in 2009 might reach 30 million.

To be sure, Acer is managing its costs effectively as well. Reuters quotes analyst Vincent Chen of Yuanta Securities as saying, "Acer has been cutting costs and expenses very successfully, and these results show that they're looking in fairly good shape."

But cost-cutting won't keep you in the black unless you have a product that hordes of PC users want to buy. And Acer certainly seem to have that part of the equation well in hand. ®

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