TAIPEI: As the PC industry embarks on its fitful road to recovery, many are betting that Taiwan's Acer and HP will lead the rebound with surging netbook sales and strong presence in booming Asia.

The two PC makers are expected to gain from consumer demand on the Chinese mainland, India and other resilient Asian markets, even as corporate demand stays weak in the global economic slowdown.

Acer, the world's No 3 PC brand, can bank on its strength in the fast-growing low-cost netbook segment, while HP's broad customer base and product mix will stand it in good stead.

"Acer will more likely recover quicker because they're doing well in the pockets that they're in ... they're one of the lower cost providers out there that are still respected," said Louis Miscioscia, research director at tech-focused US firm Brigantine Advisors.

"In this bad market, someone might be more willing to give Acer a chance, maybe before they would have bought an HP or a Dell or something else." Money from the mainland's $585 billion stimulus package is spurring growth in netbooks - cheaper laptops with fewer features - with consumers in the world's No 2 PC market after the United States making use of the scheme to buy their first computer.

Acer dominates the netbook PC segment, shipments of which the research firm IDC forecast will more than double this year to 26 million units, helped by consumers reining in their discretionary spending.

This has pushed up valuations at the Taiwan-based firm, which trades at a relatively high 18.3 times forward earnings, bolstered by a 90 percent advance in its stock price since the start of this year.

In contrast, HP trades at 11.6 times, while Dell trades at 14.3 times, according to Thomson Reuters data.

Despite the high valuations, most analysts still favor Acer , as it remains firmly in the driver's seat until corporate IT spending recovers. Acer is helped by its dominance in the low-cost segment of the market and a lean cost structure.

HP is also expected to come out ahead, since the company already has a kickstart with consumer demand that has shown signs of picking up, and an additional boost when corporate demand returns. Its shares are up about 25 percent so far this year.

HP, the world's largest PC brand, is also strong in Asia.

Reuters

(HK Edition 09/10/2009 page2)