Acer, the world's third largest PC vendor, on Friday said its revenue will drop in the fourth quarter, after previously forecasting a strong holiday season.

The company now expects fourth quarter revenue to drop 5% to 10% compared to the same time a year ago, while its operating margin meets or slightly exceeds the third quarter of 2008, it said in a statement.

But Acer also said that demand for its products remained "healthy and stable," an indication the company had to drastically reduce prices to maintain shipments amid the global economic downturn.

The fourth quarter, which runs from October through the end of December and includes the Western holiday season, is the strongest selling time of the year for many companies. (See a related story on how Acer anticipated a strong holiday season.)

Just a few months ago, Acer executives had predicted a stellar fourth quarter, including 20% to 25% quarter-on-quarter growth in shipments of netbooks and laptop PCs. At the time, executives said they had not seen a slowdown in business aside from some emerging markets such as Brazil and Russia.

The reduction in Acer's view of the fourth quarter comes just after similar downgrades by rivals Lenovo and Asustek Computer, as well as chip giant Intel, which supplies the PC industry with microprocessors and other components.

The IDG News Service is a Network World affiliate.