Acer's Q1 Revenue Hurt by Intel Chip Shortage

SAN FRANCISCO (05/02/2000) - Acer Inc.'s after-tax profit soared more than 400 percent in its first fiscal quarter, but the company's revenue dipped more than 10 percent mainly due to a shortage of processors from Intel Corp., the Taiwanese PC maker announced today.

Acer's after-tax profit reached US$90 million, up more than 400 percent from the $17.29 million reported a year ago. Earnings per share after taxes were 29 cents, up from 6 cents a share in the same period last year, Acer said in a statement issued today. All figures were given in U.S. dollars, as well as Taiwanese currency.

Acer attributed the good profit news to strong returns on its investments, and to that fact that the company is no longer shouldering losses from memory chip unit TSMC-Acer Manufacturing Corp. Acer agreed to sell its share of that company to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) in December of last year. [See "TSMC to Acquire Acer Semiconductor," Dec. 30, 1999.]Revenue for the first quarter was $946 million, down 10.9 percent from the same period last year, the Taiwanese vendor said.

Acer didn't say which type of Intel processors had been in short supply during the quarter, and officials in Taiwan couldn't immediately be reached for comment. Earlier this year, Gateway 2000 Inc. and Dell Computer Corp. also complained that a shortage of Intel processors had affected their financial performance. [See "Dell Sneaks Ahead of Lowered Q4 Expectations," Feb. 10.]Intel officials acknowledged during its first-quarter earnings call last month that the chip maker was struggling to meet demand for its high-end "Coppermine" Pentium III processors. [See "UPDATE - Demand Boosts Intel's Q1 Revenue to US$8 Billion," April 18.]Demand for all of Intel's products is still high, and the company remains unable to meet all of its upside orders from PC manufacturers, Intel spokesman George Alfs said today. Upside orders refer to new, unanticipated orders that come in from PC makers during the course of the quarter.

The chip shortages come despite the fact that Intel is quickly ramping up its operations to its most up-to-date 0.18-micron manufacturing process, Alfs said.

In its first fiscal quarter, Intel sold six times as many chips manufactured using the 0.18-micron process as the chip maker did in the immediate prior quarter, he added.

Acer, in Taipei, Taiwan, can be reached at +886-2-2696-1234, or on the World Wide Web at Intel, in Santa Clara, California, can be reached at +1-408-987-8080, or at

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