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By | Kelly Fiveash 4th September 2007 15:45

Acer CEO talks up Chinese expansion

Moo moos investor concerns over Gateway

Computer maker Acer is looking into the possibility of a Chinese acquisition following its decision to buy US-based Gateway.

Acer chief executive, Wang Jen-tang, said in an interview with the Financial Times that such a deal could boost the PC vendor's market share in China, he also hit back at investors who have criticised the firm’s motives for expansion.

Acer's share price plummeted 11 per cent in the past week as investors expressed growing concern that the firm's big spending spree could prove to be a shortsighted and expensive strategy.

Wang said that after Acer has acquired Gateway and European computer maker Packard Bell - which Acer will control as part of the deal - he wants the firm to go head-to-head with rival Chinese firm Lenovo.

Lenovo recently upped the ante when it integrated IBM's PC division into its own business. And just last week Seagate, the hard-disk-drive giant, squashed rumours of a rumoured takeover bid from the firm.

Taiwanese-based Acer will jump to third place among global PC manufacturers following its $710m acquisition of Gateway last week. However, Lenovo is currently hot-on-the-heels of the firm's market share with just one percentage point dividing the two computer makers.

US net margin could also be lifted by between two and three per cent within two years because of the Gateway deal, said Wang.

He told the FT that Acer hoped the acquisition would help it strengthen its business presence in the US market, with revenues of around $6bn to $7bn expected within a year of the acquisition.

He said: "The Chinese market is very important… But under our global strategy, the US market is even more urgent. So after we reinforce our leadership role in Europe and succeed in stabilising the US, we will start paying more attention to Asia." ®

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