Changes expected at Acer Computer

Acer Computer (宏電) is scheduled to announce a new strategy next week aimed at turning around its shrinking profit margins.

"We will put out a news release about the plan on Tuesday [Dec. 26]," said Acer spokesperson Janice Wang (王貞懿).

Analysts expect Taiwan's most well known computer maker to realign its core personal computer business by separating contract manufacturing and brand-name businesses into different divisions. They also expect the company to shore up its investment portfolio.

Acer has seen its stock price fall 80 percent over the year, hitting NT$16.1 per share yesterday. That's nearly a 10 year low.

While the nation's chaotic political situation and the global downturn in demand for personal computers are partially to blame, the company has also finally admitted to defects in its business strategy.

The year started painfully for Acer, with the company's number one contract partner announcing it would cut PC purchases drastically. IBM decided to withdraw from the US personal computer market in the first quarter of the year. The drop in orders for Acer's contract manufacturing business sparked the beginning of what looks like a corporate meltdown over the last three months.

In October, Acer cut its profit forecast for this year by a third to NT$8 billion (US$242 million) over fears of slowing demand for personal computers.

Late November arrived with the slowdown in PC orders widening. Acer then announced plans to reshuffle top level management throughout the company.

In December, news of the company's downsizing plans leaked out and Acer Group Chairman Stan Shih (施振榮) for the first time blamed himself for the company's problems.

At a conference on Thursday, Shih at long last admitted his failure to properly develop Acer. But he then quickly placed the blame on his managers by saying that they had too much independent decision making power. As a result, Shih said he would come down from his lofty position as "visionary leader" and become involved in the company's daily operations.

The company also intends to change the way its investment portfolio is managed. The portfolio may have been used to gloss over the company's growing earnings problems. Analysts said the Acer Group and its subsidiaries met earnings expectations by unloading stocks.

The company's portfolio includes heavyweights Taiwan Semiconductor Manufacturing Corp (TSMC, 台積電) Taiwan Cellular Corp (台灣大哥大) and Acer subsidiaries such as Acer Communications and Multimedia (明電).