Acer announces job cuts and Jim Wong as new CEO after losses
Taiwan's Acer announced a restructuring plan with a new chief executive and 7 per cent job cuts yesterday after a worse-than-expected net loss of NT$13.12 billion (HK$3.5 billion) in the third quarter.
Taiwan's Acer announced a restructuring plan with a new chief executive and 7 per cent job cuts yesterday after a worse-than-expected net loss of NT$13.12 billion (HK$3.5 billion) in the third quarter.
Acer corporate president Jim Wong will succeed J.T. Wang 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 would reduce this by 7 per cent, saving about US$100 million a year from next year.
It said it would raise NT$2.87 billion by issuing 136 million new common shares priced at NT$21 each. The funds will be used to support the restructuring plans, which are expected to result in a one-time cost of US$150 million to be booked in the fourth quarter.
The computer maker has been struggling to increase sales by shipping more tablets amid weak global demand for laptops, which make up the majority of its business. In the third quarter of this year, global laptop sales declined 9.5 per cent, 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 NT$21 is higher than the closing price of NT$18.15 [yesterday], showing the confidence of the company in seeing a higher book value next year."
Acer's shares closed down 1.1 per cent yesterday, in line with the broader market's 1.1 per cent decline.
The net loss of NT$13.12 billion reported separately yesterday far exceeded a median forecast loss of NT$109 million in a poll of 16 analysts, according to Thomson Reuters SmartEstimates, with the company hit by rising expenses and inventory costs from the launch of the new Microsoft operating platform.
The figures compare with a net loss of NT$343 million in the second quarter and a net profit of NT$68 million in the same quarter a year ago.
"[The third quarter'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.
Acer said there was also an intangible asset impairment loss, which includes trademarks and goodwill, of NT$9.94 billion during the reporting period.
Looking at the fourth quarter, Acer said it expected shipments for notebooks, tablet PCs and Chromebooks to drop 10 per cent from the previous quarter owing to a change in brand strategy, but gross margin would improve.
