Acer Looks for New Direction as CEO Steps Down; “A merger is still quite unlikely, as one thing about people that build brands is that they are very stubborn”

November 7, 2013 Leave a comment

Nov 6, 2013

Acer Looks for New Direction as CEO Steps Down

EVA DOU

Acer Inc.’s2353.TW -6.89% top executive is resigning. Now the question is, what are the changes in store for the company? Acer Chairman J.T. Wang attends a news conference in Taipei on June 3, 2013. Late Tuesday, Mr. Wang said he’s stepping down as both chairman and chief executive, taking the blame for the Taiwanese personal computer maker’s poor financial results. His announcement came on a day when Acer, the fourth-largest PC maker globally, announced a worse-than-expected third-quarter net loss and plans to eliminate hundreds of jobs.Acer has been unprofitable since last year as global demand for PCs fell and it scrambled to play catch-up in more promising sectors like tablets and smartphones.

“I feel a lot of regret about the continuing losses,” Mr. Wang  said Tuesday night at a hastily arranged press conference. “Shareholders have been patient, but I still think we need to find someone more capable to lead Acer out of this predicament.”

Mr. Wang, who has spent 32 years at Acer, became both chairman and CEO in 2005, but handed over the chief executive’s role to Gianfranco Lanci in 2008. After Mr. Lanci was ousted in 2011, Mr. Wang took over the CEO’s job once again, in addition to his duties as chairman.

Acer’s corporate president, Jim Wong, will take over as CEO from January, while the company will name a new chairman next June. Mr. Wong has said as the new CEO he will work to improve the efficiency of the company’s global operations and build its brand. But so far details are sparse about his plans for the company. Analysts predict further management reshuffling on the horizon.

“After the chairman’s resignation…we would not be surprised to see the company make more senior management changes, similar to what has happened recently at MicrosoftMSFT +1.91%, Blackberry, HTC, NokiaNOK1V.HE +1.56%, to name just a few, to give the company a new direction with a new strategy,” Kirk Yang, Barclay’s managing director of tech hardware research for Asia excluding Japan, said in a research note on Wednesday.

Mr. Wang’s exit would also mean the company’s founder and board member, Stan Shih, would play a more influential role. Acer became Taiwan’s first globally known consumer electronics brand under Mr. Shih, who will now lead a “Transformation Advisory Committee” to provide direction for the company’s future.

Questions also loom about whether the company could now become a takeover target. Mr. Wang has consistently opposed any kind of merger, but when Mr. Shih was asked about a potential merger in August, he was quoted by local media as saying he would “let nature take its course”. Lenovo Group Ltd.0992.HK -0.24% had also approached Acer about acquiring the company, but Acer rejected it, Mr. Wang told The Wall Street Journal earlier.

When Mr. Wang was asked about merger prospects on Tuesday, he said it was still not in the plans.

“A merger is still quite unlikely, as one thing about people that build brands is that they are very stubborn,” he said.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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