Reportedly afraid that hiring American and European engineers for a mobile push would “de-Taiwanese” the company, Acer, Inc. (TPE:2353) fired its star CEO, who had propelled it to become the world’s second largest PC maker. That man — Gianfranco Lanci — went on to lead Hong Kong-based Lenovo Group, Ltd.’s (HKG: 0992) European, Middle Eastern, and Asian businesses (EMEA), propelling Lenovo to #1 in the PC market and #3 in the smartphone market. Acer meanwhile has fallen on dark times.
I. Acer Manages to Lose More Than Analyst Predictions Again
Acer witnessed an industry-worst decline of PC sales of 24.1 percent (according to the Time Warner Inc.’s (TWX) analysis house IDC Group.) in Q4 2013, and has fallen to fourth place in PC sales, outsold nearly 3-to-1 globally by Lenovo, according to Gartner, Inc. (IT).
Acer entered the holiday season coming off a record loss of T$13.12B ($446M USD) on revenue of T$92.1B USD ($3.13B USD).
Of all the major OEMs Acer saw the biggest decline in PC sales in 2013.
In Q4 2013 it did better; but not much better. It lost NT$7.63B ($254.79M USD), plus took an additional write down of NT$1.3B (US$44M) on unsold inventory (Windows 8 tablets, ultrabooks) and other items.
Analysts surveyed by Thomson Reuters I/B/E/S expected only a loss of NT$3.60B ($120.21M USD), less than half of the actual loss.
Revenue fell to NT$86.7B (US$2.89B).
II. Executives Get Paycut — But Will it Force Change or Quicken Fall?
In addition to a previously announced 7 cut to its staff globally, after its latest quarter, Acer announced it would cut executive pay 30 percent.
We’ve seen this kind of strategy in recent history by another struggling Taiwanese OEM, HTC Corp. (TPE:2498). In HTC’s case the strategy proved a double-edged sword as much of the company’s top level talent defected elsewhere. Some HTC executives even plotted to steal company secrets after the pay cuts were announced. We’ll see how well it works out for Acer.
Jason Chen, Acer’s new CEO, addresses reporters on Monday. [Image Source: Reuters]
In a press release Acer writes:
Acer acknowledges missteps in the past on resource allocation, and the over expectation of ultrabooks and notebooks with touch panel. Although the products were leading in design they did not accurately fulfill market needs.
Taking immediate action, Acer will formulate its product strategy with more caution and implement precise production planning and inventory control. Senior executives have also taken voluntary salary cuts of 30% from January to share responsibility.
Acer is currently on its third CEO in just three months. To be fair, though, the latest CEO — Jason Chen — carries with him a strong track record from Taiwan Semiconductor Manufacturing Comp., Ltd. (TSMC) (TPE:2330). Whether he can fix Acer’s self-described “cheap” and “unprofitable” product, however, is anyone’s guess.
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