Acer counts on extra life from gamers to escape PC purgatory

[TAIPEI] Acer Inc. is finally showing signs of life. Now it's hoping a growing legion of gamers will help pull it out of a multi-year rut.

Once the global leader in laptop sales, Acer is counting on high-end gear such as displays and slick gaming rigs to sustain a recovery, with the company projected to show its first annual revenue growth in seven years. Chief Executive Officer Jason Chen argued in an interview that gaming and esports will buttress a turnaround effort based on linking its hardware to virtual reality and artificial intelligence-based applications. Acer is one of the highest profile victims of the post-smartphone PC implosion. Despite surging since reporting better-than-expected profit in November, its shares are still down almost 80 percent from a decade's high in 2010. But while global PC sales fell again last year, products targeted at serious gamers rose to between 13 per cent and 15 per cent of Acer's revenue, Chen said in the interview.

Revenue from gaming gear almost doubled in January, Mr Chen told reporters Wednesday. He also shed light on plans to hive off different divisions, confirming that Acer will apply to Taiwanese regulators to float StarVR - its virtual reality venture with Sweden's Starbreeze AB - and its smart parking systems business. The Taiwanese company's shares gained as much as 2.9 percent.

"The only other sport bigger than esports is soccer, the World Cup," Mr Chen, who took up his post at the start of 2014, said in an interview with Bloomberg Television this month. "The sky is the limit." Acer faces competition from the likes of Razer Inc. to Asus and MSI in everything from gaming mice to headsets. But its growing momentum in gaming gear may stem from price competitiveness. The company's top-of-the-line Predator rigs have won strong reviews for design and performance and, at up to US$2,500 apiece, compares favourably with the likes of Dell's Alienware machines. Morgan Stanley equity analyst Melrose Chiu expects Acer's gaming sales to soar 70 per cent this year - but other product segments should remain flat. Mr Chiu however is one of five analysts to have downgraded Acer in the past three months, citing its pricey valuation.

Mr Chen in particular talked up Acer's prospects in pro-gaming. Esports revenue is expected to surge an average of more than 32 per cent annually to US$1.5 billion through 2020, according to gaming consultancy Newzoo. And viewership for competitive match-ups isn't expected to ease anytime soon. Newzoo estimates 385 million people watched esports in 2017; this year's Super Bowl attracted a U.S. audience of 103.4 million, its lowest in nine years.

He was careful however to emphasise that Acer will stick to its fundamentals - PCs - even as it moves upscale.

"It won't take up more than 50 per cent of our revenue but it will grow to more than where we are today," Mr Chen said.

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