Morgan Stanley yesterday said the arrival of former Acer Inc (宏碁) chief executive officer Gianfranco Lanci as a global consultant for Lenovo Group Ltd (聯想) is positive for the Chinese PC maker, given that his strength in consumer channels in Europe will complement Lenovo, but the move will weigh on Acer’s already sluggish business in Europe.
“Lanci’s strength is in consumer channels in Europe, where Lenovo is weak. We view this as a negative for Acer; it may weigh further on its business in Europe,” Morgan Stanley said in a report.
Top Chinese PC maker Lenovo announced on Friday that it had hired Lanci to help expand its global consumer business, with primary focus on the integration of Medion AG, a German electronics retailer it acquired last month.
“The only uncertainty is that Lanci signed a one-year non--competition contract with Acer when he left at the end of March. Lanci is joining Lenovo as a consultant; we do not know if his role with the company will expand,” the report said.
Morgan Stanley believed Lenovo would benefit from Hewlett-Packard Co’s (HP) loss of market share amid its planned spinoff of its PC division, Lanci’s hiring should help it build consumer business in Europe.
Lenovo had a 12.2 percent global PC market share for the second quarter, but garnered only 5.8 percent in Western Europe. It had a 15.9 percent market share in the global commercial PC market versus only about 9 percent in the consumer PC business, the brokerage house said.
Joanne Chien (簡佩萍), a senior analyst at Digitimes Research, said yesterday that Lenovo was likely to replace Dell Inc as the world’s second-largest PC brand this year and the hiring of Lanci to strengthen its foothold in Europe would help the Chinese company to challenge HP’s No. 1 place in the coming years, according to a statement issued yesterday.
Morgan Stanley reiterated its overweight rating on Lenovo and raised its target price to HK$6.2 from HK$5.5, and it reiterated underweight on Acer and maintained its target price at NT$26.
Acer shares tumbled 4.9 percent to close at NT$34 on the Taiwan Stock Exchange yesterday.
Morgan Stanley said Acer’s operating losses should narrow in the second half because its inventory burden has been gradually eased.
Acer plunged into the red in the second quarter with losses of NT$6.79 billion.
“The influence of key personnel will only last for a few years. What matters most is how a company’s preparing itself over the long-term business deployment,” Topology Research Institute (拓墣產業研究所) researcher Ryan Lee (李易聰) said yesterday.
Acer is on the right track to restructuring its business, but it remains to be seen how effective the outcome will be, he added.
Acer Group (宏碁集團) founder Stan Shih (施振榮) cast a vote of confidence in Acer by telling reporters on Saturday that Acer’s management would be able to deal with Lanci moving to Lenovo in a positive manner.
He said Taiwanese companies should adopt a positive mindset in tackling changes, and competition would strengthen a company’s competitiveness.
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