Analysts are conservative about the operation outlook of Acer Inc’s (宏碁) new business strategy, after the PC vendor last week announced that it would separate its core and new businesses in an effort to accelerate its corporate transformation.
Some analysts said they need to know more details about the company’s new business model and see clear signs of its structural growth before making sure that Acer’s plan is workable, while others said they suspect the move is to pave the way for potential divestment in the future.
Under the restructuring plan revealed on Thursday last week, Acer proposes to categorize its information technology and PC-related units as its “core business,” while grouping cloud services, smartphones and wearable devices with value-added Internet of Things (IoT) applications as the “new business.”
Acer also plans to set up a new holding company with paid-in capital of up to US$130 million to manage the operation and investments of its new business, Acer founder and former chairman Stan Shih (施振榮) told reporters on the sidelines of a news event held by the National Culture and Arts Foundation (國家文藝基金會) on Friday.
Acer president George Huang (黃少華) is expected to be the chairman of the new holding company and chief executive officer Jason Chen (陳俊聖) the general manager, Shih said.
“The profitability of new business remains unclear, so do Acer’s investment plans for the new groups. We advise investors not to view the new division as an immediate share price catalyst,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Vincent Chen (陳豊丰) said in a note on Friday.
HSBC Securities Taiwan Corp thinks Acer’s decision to separate its cloud-related business from its core business is aimed at allocating more resources to expand its new business.
“That being said, it does not change our view that the company lacks the critical ‘killer product’ to drive structural growth,” HSBC analyst Jenny Lai (賴惠娟) said on Friday.
Fubon Securities Co (富邦證券) said the outlook for Acer’s core business remains bleak and its plan of forming a holding company for the new business might indicate a move to “sell off or introduce new shareholders to any subsidiary company under the holding structure,” a client note said.
A market watcher, who declined to be named, said the biggest concern for Acer is that the business model of its cloud-computing segment — Build Your Own Cloud (BYOC) — remains unclear.
“What exactly is BYOC’s business model? How much money has Acer invested in it? How long does the company expect BYOC to become profitable? To me, these questions remained unanswered,” he said.
Last week, Acer reported the second consecutive profitable year for last year, with net income of NT$604 million (US$18.43 million). However, the number was still 66.25 percent lower than the NT$1.79 billion in the previous year. Consolidated revenue also declined 20 percent year-on-year to NT$263.78 billion.
Analysts said Acer’s notebook computer shipments this quarter might drop by a high-single digit percentage from a year earlier, due to the extended industry headwinds and the company’s continued falling market share.
“The overall outlook of the notebook industry is bleak in the first half of this year, and we believe Acer’s shipment volume could be weaker than its peers, mostly due to its falling market shares,” the market watcher said.
The company’s revenue for this quarter is forecast to plunge by 21.51 percent annually and 22 percent quarterly to NT$53.32 billion, Yuanta and HSBC estimates show.
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