Acer Inc (宏碁) yesterday said it is to book NT$6.34 billion (US$198.09 million) in intangible asset impairment losses mainly due to its acquisition of cloud-computing company iGWare Inc in 2012, which is to reduce its earnings per share by NT$2.06 this year.
As a result, the Taiwanese company is to swing into the red this year, given that its combined earnings in the first three quarters amounted NT$0.28 per share, according to its financial statements to the Taiwan Stock Exchange.
The company’s net value per share would drop to NT$19 from NT$21, Acer said.
It is to be Acer’s first loss-making year since chief executive officer Jason Chen (陳俊聖) took the helm in 2014.
“The decision was only arrived at this afternoon during a special board meeting. We have just sent out an internal letter to employees to explain our decision,” Chen told a news conference at the Taiwan Stock Exchange.
The company has been adjusting its structure this year and has established an independent cash-generating unit for its new cloud-related businesses in an attempt to encourage entrepreneurship among its employees, Chen said.
However, after the establishment of the unit, the company discovered iGware’s lack of cash generation capacity and had to absorb an impairment charge of NT$6.19 billion in accordance with the provisions of the International Accounting Standard 36, Chen said, adding that iGware’s intangible assets would become zero after the the impairment charge.
Acer is also to book Gateway and Packard Bell’s trademark value loss of about NT$150 million, the company said in a news statement.
Chen said the company could cut US$700 million in amortization expenses per year after it writes off iGware’s intangible assets, which would reduce Acer’s burden and support the expansion of the new businesses.
Despite the impact on Acer’s earnings per share, Chen said the impairment would not affect the company’s operations and cash levels, adding that the company had NT$36.6 billion in cash and cash equivalents by the quarter ending Sept. 30.
Chen said the management team still plans to distribute cash dividends to shareholders next year, with the use of its additional paid-in capital of NT$36 billion.
In a filing with the Taiwan Stock Exchange, Acer said the board has approved a NT$35.44 billion share repurchase program.
The company plans to buy back about 100 million shares at between NT$10 and NT$19 per share in the open market.
The share buyback plan will be conducted from today through Feb. 20.
Acer shares fell 0.37 percent to close at NT$13.3 per share ahead of the company’s news conference.
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