Acer Inc (宏碁) on Wednesday last week announced top executive appointments to meet the PC brand’s operational plans, while its third-quarter financial results — released on the same day — missed market expectations.
Acer president of IT products business Jerry Kao (高樹國) and president of corporate marketing, business planning and operations Tiffany Huang (黃資婷) are to serve as co-chief operating officers, Acer said in a filing with the Taiwan Stock Exchange.
“To meet Acer Group’s operational requirements, the board of directors approved establishing and appointing co-chief operating officers,” the statement said.
Effective from Thursday, Kao and Huang were to report directly to Acer chairman and chief executive officer Jason Chen (陳俊聖). Kao joined Acer in 1995 and Huang has worked for the company since 1988.
The changes came as Chen’s leadership has shifted the company’s focus to less-competitive niches, such as gaming PCs, ultrabooks and Chromebooks in the past few years. The development of several non-PC subsidiaries, such as StarVR Corp (宏星技術), Acer Cyber Security Inc (安碁資訊) and Acer ITS Inc (智通), has improved the company’s fundamentals.
In the third quarter, Acer reported that operating income increased 25.4 percent year-on-year to NT$1.17 billion (US$38 million), the highest third-quarter results in the past eight years.
However, net income decreased 37 percent annually to NT$912 million, with earnings per share (EPS) of NT$0.3, compared with NT$0.48 for the same period last year.
Consolidated revenue rose 7.8 percent last quarter from a year earlier to NT$65.33 billion as the company saw sales growth across the Americas, the Asia-Pacific, Europe, the Middle East and Africa, while gross margin was 10.6 percent and operating margin was 1.8 percent, Acer said in a statement.
In the first three quarters of this year, net income totaled NT$2.5 billion, up 42.5 percent year-on-year, with cumulative EPS rising from NT$0.58 to NT$0.83 over the period, boosted by robust sales in the US, Russia and Southeast Asia, it said.
Acer’s quarterly results missed market expectations again due to a higher mix of low-end gaming systems, increased competition in the low-end gaming space and currency headwinds in emerging markets, which dragged down margins, Morgan Stanley Asia Ltd said in a note on Thursday.
A shortage of central processing units (CPUs) at Intel Corp would continue to affect average and low-end PC products as the US chipmaker prioritizes the supply of CPUs to high-end products in the server and gaming segments.
“The effect of the CPU shortage and foreign-exchange headwinds in the emerging markets will weigh on near-term demand,” Morgan Stanley analyst Howard Kao (高燕禾) said.
“The lack of a long-term strategy and stretched valuation makes us continue to rate Acer as underweight,” he added.
As the US-China trade dispute continues and punitive tariffs are raised next year from 10 percent to 25 percent, Acer is expected to see higher product costs and a need to increase product prices, Yuanta Securities Investment Consulting Co (元大投顧) analyst Calvin Wei (魏建發) said on Thursday.
“Due to a muted peak season, we expect fourth-quarter sales to decline by 4 percent quarter-on-quarter, compared with quarterly growth of 5 to 10 percent in the past few years,” Wei added.
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