The Wall Street Journal describes the turnaround at PC company Acer as one of the great stories in the industry. Dell (DELL) should be so lucky.
Acer expects its unit sales to grow at three or four times the industry average of 10% this year, and the company already sells about as many notebooks as Dell does. Acer’s current share of the US market is a little over 2%.
If Acer is going to meet its ambitious growth targets in the US, it really only has two big targets–Hewlett Packard (HPQ) and Dell (DELL). HP trades near its 52-week high at $41, and its success marketing PCs and printers gives it a position at the top of the food chain. Dell trades at $23.26, in the middle of its 52-week range, and would seem to be the more vulnerable of the two companies.
Dell and HP have more to worry about than Acer. Chinese PC company Lenovo is setting up a consumer division to strengthen its sales outside of corporations. Dell needs to do the same to cut its reliance on sales to large companies.
But, it would be a mistake to think that Dell is the only target for the two Asian PC companies as they come into the US. Dell is wounded, but that means that it has to fight harder for share, perhaps by cutting prices. HP is hardly fat and happy, but it does have more market share to go after. And, just as it took share from Dell, it becomes a logical focus for Acer and Lenovo.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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