Acer stock soars after change in management

STRATEGIZING::The PC vendor needs to step up its cost-cutting efforts as well as its drive into mobile devices such as tablets and smartphones, analysts said

By Helen Ku  /  Staff reporter

Sat, Nov 23, 2013 - Page 13

Acer Inc (宏碁), the world’s fourth-largest PC maker, yesterday saw its share price soar 5.13 percent to NT$16.40 after the company announced a major management shake-up in light of massive quarterly losses.

That was the stock’s highest closing in nearly two weeks. It has slid 34.92 percent from NT$25.20 at the start of the year, lagging the benchmark index, which has gained 5.42 percent during the same period.

Acer on Thursday unveiled major management changes, with the board approving the resignations of Wang Jeng-tang (王振堂) as chairman and chief executive, and of Jim Wong (翁建仁) as president, and electing founder Stan Shih (施振榮) to take over their positions.

“Shih’s return indicates the company founder’s determination to act as an executive, rather than just an adviser, during this difficult period for Acer,” Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豊丰) said by telephone, adding that the management shake-up is overall a positive development.

Commenting on Acer’s stock performance, Chen said Wong’s resignation was responsible behavior which investors expected.

“Wong, as a president of the world’s largest PC maker, should be held accountable for Acer’s current dire situation because he was the decisionmaker for most of Acer’s product strategies,” Chen said.

While mobile devices such as tablets and smartphones took off, Acer failed to catch the trend because it was too focused on Ultrabooks, especially consumer laptops, Chen said.

As tablets are consumer electronics products and cannot totally replace commercial laptops, Acer should adjust its product strategy by either reducing its consumer laptop shipment or following its largest domestic rival, Asustek Computer Inc (華碩), which has been developing more smartphone lines, he added.

Acer saw its net loss balloon to NT$13.12 billion (US$442.6 million) last quarter, from a net loss of NT$343 million during the previous quarter.

That translates into a net loss per share of NT$4.82 last quarter, compared with a loss per share of NT$0.13 in the second quarter, according to Acer’s financial report.

Fubon Securities Co (富邦證券) analyst Arthur Liao (廖顯毅) said that Acer should prioritize developing more handset products and focus on emerging markets such as China to improve its profitability.

“The first best step [for Acer] is to cut operating costs. The company should then boost its presence in the mobile device market to turn profitable,” Liao said by telephone.

In an e-mailed statement on Nov. 5, Acer said it planned to cut up to 7 percent of the company’s global workforce of about 8,000 as part of efforts to cut operating expense.

“Acer might stanch the bleeding by tackling its expenses first and then take a break and think about better business strategies,” Liao said, adding that the company might be able to turn a profit in two to three years at the earliest.