Wed, Jun 24, 2015 - Page 13 News List

Acer prioritizes debt over dividends

PROFIT NOT SHARED:The firm saw net income of NT$1.79 billion last year, but CEO Jason Chen said that his priority was on company finances and operating income

By Lauly Li  /  Staff reporter

Shareholders of Taiwanese PC maker Acer Inc (宏碁) expressed anger yesterday as the company said its priority was to make up for a deficit incurred from previous share buybacks instead of issuing dividends.

“I hope to distribute dividends to shareholders next year, but we still have a NT$1.1 billion [US$35.5 million] deficit related to share buybacks that we must find ways to fill this year,” Acer chairman George Huang (黃少華) told shareholders at the company’s annual general meeting in Taipei, citing stock-exchange regulations.

Huang’s remarks were in response to several shareholders’ questions about the company’s dividend policy, as Acer’s board said it would not distribute dividends this year, despite Acer turning profitable last year following three consecutive years of net losses.

The company made a net income of NT$1.79 billion last year, but has spent NT$900 million of that to write off share buyback-related losses, while allocating more than NT$800 million for retained earnings.

Acer said it still has a NT$1.1 billion share buyback-related loss that needs to be covered before it can issue dividends.

Facing a packed room of shareholders, Acer chief executive officer Jason Chen (陳俊聖) said that his priority was to stabilize the company’s finances and continue to improve operating income.

“My main mission is to help this brand [Acer] survive in the market,” Chen said.

Chen said Acer faced headwinds in the first half of the year, mainly due to the piling up of inventories of low-priced notebooks, exchange rate volatility and falling prices of crude oil.

“The depreciation of the euro against the US dollar and the fall in crude oil prices also led to weak PC demand in Europe, Russia and the Middle East,” Chen said.

The company kept notebook computer inventories at a low level in April and last month to prevent inventories piling up at sales channels before the launch of Microsoft Corp’s Windows 10, which led to a relatively poor sales performance over the past few months, he added.

Chen said that Acer would maintain the low-inventory strategy until Microsoft’s new operating system hits the market on July 29.

The company is expected to perform better in the second half because of seasonal demand and replacement demand following the launch of Windows 10, he said.

The PC segment remains Acer’s core business, accounting for nearly 80 percent of its total revenue.

Apart from traditional consumer PCs, the company plans to focus more on two-in-one detachable notebooks, Chromebooks and commercial PCs, Chen said, adding that Acer’s two-in-one notebooks secured more than 50 percent shares of the markets in Thailand and Indonesia, while Acer’s Chromebooks garnered a 34 percent share of the US market.

Huang said the company is optimistic over the potential of its cloud-computing business.

Following the establishment of cloud-computing centers in Taiwan and the US last year, Huang said Acer is also to launch a US$4 million cloud-computing subsidiary in Chongqing, China, this month.

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