Acer Chairman and CEO Wang Resigns After Posting Record Loss

Acer Chairman and CEO Wang Resigns After Posting Record Loss

Acer Chairman and Chief Executive Officer J.T. Wang resigned after the computer maker posted a record quarterly loss and said it will cut its global workforce by 7 percent amid a global PC slump. Wang will be replaced as CEO by current President Jim Wong from Jan. 1 and will retain the chairman’s role until June. Founder Stan Shih will lead a new Transformation Advisory Committee to propose strategic changes, the Taipei-based company said in a statement. Acer’s third-quarter net loss was NT$13.1 billion ($445 million), the largest on record and wider than the NT$59 million average loss estimate of analysts. Earnings were dragged down by a NT$9.94 billion write off related to five acquisitions, including Gateway Inc. and iGware Inc., it said today. The introduction of tablet devices, such as Apple Inc. (AAPL)’s iPad, and the failure of new versions of Microsoft Corp.’s Windows operating system to drive demand has pushed PC sales lower. Shipments dropped 11.4 percent in the second quarter from a year earlier, according to Bloomberg Industries data. The loss spurred Acer to announce a 7 percent cut in its global workforce and plans to issue 136 million new shares. The restructuring will result in a one-time cost of $150 million this quarter, it said.To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

Taiwan’s Acer aims to revamp with new CEO and job cuts

9:16am EST

By Clare Jim

TAIPEI (Reuters) – Taiwan’s Acer Inc announced a restructuring plan with a new chief executive and 7 percent job cuts on Tuesday following a worse-than-expected net loss of T$13.12 billion ($446 million) in the third quarter.

The move by the world’s No. 4 PC vendor by shipments follows several quarters of disappointing results since 2011 – it has posted a loss in five of them – amid sliding demand for traditional computers.

Acer corporate President Jim Wong will succeed J.T. Wang, who is now 58, as chief executive, while Wang will stay on as chairman until June.

“Acer encountered many complicated and harsh challenges in the past few years. With the consecutive poor financial results, it is time for me to hand over the responsibility to a new leadership team to path the way for a new era,” Wang said in a statement.

The company, with 8,000 employees worldwide, said it will reduce this by 7 percent, saving around $100 million a year from 2014.

It said it will raise T$2.87 billion by issuing 136 million new common shares priced at T$21 per share, to support the restructuring plans, which is expected to result in a one-time cost of $150 million to be booked in the fourth quarter.

The computer maker has been struggling to increase sales by shipping more tablets amid a weak global demand for laptops, which make up the majority of its business. In the third quarter of 2013, global laptop sales declined by 9.5 percent, according to research firm IDC.

Acer has also set up a Transformation Advisory Committee, chaired by company founder Stan Shih.

“Acer wants to change and these are its initial steps, but I can’t see they will be able to make real differences as of now,” said Yuanta Securities analyst Vincent Chen.

“The right issue price of T$21 is higher than the closing price of T$18.15 today, showing the confidence of the company in seeing a higher book value next year.”

Acer’s shares closed down 1.1 percent, in line with the broader market’s 1.1 percent fall.

The net loss of T$13.12 billion reported separately on Tuesday far exceeded a median forecast loss of T$109 million in a poll of 16 analysts, according to Thomson Reuters SmartEstimates, with the company hit by an increased expenses and inventory costs due to the launch of the new Microsoft operating platform.

The figures compare to a net loss of T$343 million in the second quarter and a net profit of T$68 million in the same quarter a year ago.

“Q3’s operating loss was mainly due to the gross margin impact of gearing up for the Windows 8.1 sell-in and the related management of inventory,” the company said in a statement.

Acer said there was also an intangible asset impairment loss, which includes trademarks and goodwill, of T$9.94 billion during the reporting period.

Looking at Q4, Acer said it expects shipments for notebooks, tablet PCs and Chromebooks to drop 10 percent compared to the previous quarter due to an adjustment in brand strategy, but the gross margin will improve.