Acer Inc’s (宏碁) share price fell limit down yesterday, a day after the company announced layoffs in Europe and an inventory write-off of US$150 million.
Analysts also predicted more problems ahead as the company faces long-term challenges in tapping into the fast-growing tablet computer market.
Acer closed down 6.99 percent at NT$51.90, as the company’s announcement of a new share buyback plan failed to lend support to its stock price.
Photo: Patrick Lin, AFP
Acer said on Wednesday it would repurchase 27 million of its shares on the open market from yesterday until Aug. 1 at between NT$55 and NT$80 per share.
“The massive write-off could bring Acer’s share price to below NT$50,” Citigroup Global Markets analyst Kevin Chang (張凱偉) said in a research note.
Citigroup slashed its earnings per share (EPS) forecast for Acer from NT$3 to between NT$1.50 and NT$2, citing the one-time writedown in the second quarter. It maintained its “sell” rating, with a target price of NT$35.
Calvin Huang (黃文堯), an analyst at Daiwa Securities Group Inc, also cut his forecast for Acer’s full-year EPS by 47.2 percent to NT$1.87.
“We are more pessimistic about the PC market and do not think Acer can sustain its earnings growth with new products in 2011,” Huang said in a report, citing his observation of Acer’s product showcase at Computex Taipei. “We don’t believe it can revive its earnings growth with these new products.”
Huang said Acer’s restructuring might take more than a year. Moreover, a lack of software development capability would be a major long-term challenge for the company, making it more difficult to differentiate itself from other PC brands, he said.
“Acer had been strong in the commodity PC market given its aggressive pricing, but the PC market is changing, with most users buying products for a good experience, instead of on the basis of low pricing,” he said.
Daiwa kept its “sell” rating and target price of NT$35.
If Acer decided to book the US$150 million write-off on European inventories and accounts receivable, as well as the US$30 million in layoff expenses in the second quarter, it might swing into a net loss in the quarter, compared with a net profit of NT$3.6 billion (US$125.4 million) during the same period last year, analysts said.
The proposed bonus cuts for executives and employees also pose a challenge as the move is likely to hit employee morale at a time when the company needs to engage more staff in research and development, they added.
However, an analyst at E.Sun Investment Consulting Co (玉山證券投資顧問) said he remained optimistic about Acer, with no bad news coming from its supply chain.
“It is better for the company to drop all the bombshells at the same time, as investors would think it’s already hit rock bottom,” he said.
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
CUSTOMERS’ BURDEN: TSMC already has operations in the US and is a foundry, so any tariff increase would mostly affect US customers, not the company, the minister said Taiwanese manufacturers are “not afraid” of US tariffs, but are concerned about being affected more heavily than regional economic competitors Japan and South Korea, Minister of Economic Affairs J.W. Kuo (郭智輝) said. “Taiwan has many advantages that other countries do not have, the most notable of which is its semiconductor ecosystem,” Kuo said. The US “must rely on Taiwan” to boost its microchip manufacturing capacities, Kuo said in an interview ahead of his one-year anniversary in office tomorrow. Taiwan has submitted a position paper under Section 232 of the US Trade Expansion Act to explain the “complementary relationship” between Taiwan and the US
RSS