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.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to