Acer chairman resigns, Lenovo rebuffed by BlackBerry
The axiom that history repeats itself certainly seems to be true for fast-sinking Taiwanese PC maker Acer (Taipei: 2353), which has just announced the resignation of its chairman J.T. Wang.
In the meantime, the region's other top PC maker Lenovo (HKEx: 992) was probably wishing for a repeat of history, hoping that its successful purchase of IBM's (NYSE: IBM) PC business in 2005 would be repeated with a recent bid for dying smartphone pioneer BlackBerry (Toronto: BBY). But instead, media are reporting that Lenovo never bothered to make a formal bid for BlackBerry, after being told that such a deal would be blocked by Ottawa due to national security concerns.
Some may argue this pair of developments mark big setbacks for 2 of Asia's most successful PC makers, as each tries to find its way in a rapidly changing technology world where people are abandoning traditional desktop and laptop PCs for more mobile devices like smartphones and tablets computers. But from my perspective, both of these developments should be welcome by investors for reasons that I'll explain shortly.
Let's start off with Acer, which announced Wang's resignation after the company released dismal results that saw it post a US$442 million loss in the third quarter. A former engineer, Wang teamed up with former Acer CEO Gianfranco Lanci to build the company into one of the world's top PC makers by correctly betting on the rise of laptop computers to overtake traditional desktop models.
But then Acer failed to anticipate the rapid move from laptop and desktop PCs to more mobile devices like tablets and smartphones, launching it on a rapid downward spiral that saw Lanci resign in 2011 and has now forced out Wang. This downward spiral looks like history repeating itself, as Acer underwent a similar rise followed by a rapid plunge around a decade ago, which almost drove it out of business. If the company is lucky, perhaps history will repeat itself again and Acer will rise up once more. At the very least, Wang's departure will give Acer a chance to fix itself under new leadership, which should ultimately be good news for investors.
From Acer let's look at Lenovo, which has remained largely quiet on its intentions about a potential bid for BlackBerry, the former smartphone superstar whose fortunes have plunged as it was overtaken by Apple (Nasdaq: AAPL), Samsung (Seoul: 005930) and other brands. I always suspected that the acquisitive Lenovo would make a bid for BlackBerry, and even said such a purchase could provide the Chinese firm with a well-respected, high-end smartphone brand.
Now we're learning that Lenovo indeed was interested in such a bid, but that talks never went very far after it learned that any deal would be blocked by the Canadian government due to national security concerns. Ottawa objected because BlackBerry is very closely tied to Canadian telecoms networks due to the company's history as a provider of secure email services. Lenovo followers will recall national security concerns were also raised when the company bid for IBM's PC assets in 2005, but Washington ultimately approved that deal.
Somewhat ironically, Ottawa's veto of any Lenovo involvement could ultimately result in BlackBerry's death, since no one else seems interested in the smartphone maker. But from Lenovo's perspective, I think the company should ultimately be thankful that it didn't get a chance to buy BlackBerry. Such a deal would have been costly, and ultimately Lenovo would have faced numerous problems trying to fix a company that is probably broken beyond repair.
Bottom line: The resignation of Acer's chairman and a government veto of a Lenovo bid for BlackBerry are positive developments for both PC makers.
To read more commentaries from Doug Young, visit youngchinabiz.com