Acer Halves Tablet Forecast on Concern Europe Demand Weak

Acer Inc. (2353), the Taiwanese PC maker battling excess inventory and a share-price slump, more than halved its tablet forecast because of concerns a weaker European economy may damp demand.

Tablet shipments will be about 2.5 million to 3 million units this year, President Jim Wong said in Taipei today. Chairman and Chief Executive Officer JT Wang as recently as May 10 forecast selling 7 million of the devices, which compete with Apple Inc. (AAPL)’s iPad and Samsung Electronics Co.’s Galaxy Tab.

Wang, who took on the role of CEO after Gianfranco Lanci resigned in March, was forced to write off $150 million of inventory and cut 300 jobs in its Europe, Middle East and Africa market after missing its own sales forecasts for two straight quarters. Wong, promoted to president in April, is looking to tablets to drive growth as sales of low-cost netbooks slow.

Acer shares have slumped 43 percent this year to NT$51.30 at the 1:30 p.m. close of trading in Taipei today, while the benchmark Taiex index has declined 1.6 percent in the period.

In March, analysts including BNP Paribas SA’s Patty Liu began cutting their recommendations on the stock, switching from an average “buy” to a consensus “sell,” as the company slashed its first and second-quarter revenue forecasts. Nineteen of 30 analyst ratings compiled by Bloomberg now suggest investors sell the stock. Lanci quit by the end of the month, with Wong taking over as president in April.

‘Abnormalities’ Found

Internal audits in Europe, the Middle East and Africa, its largest market at 38 percent of sales, revealed “abnormalities in terms of channel inventory stored in freight forwarders’ warehouses, and in the accounts receivable from channels in Spain,” Taipei-based Acer said on June 1, announcing the inventory writeoff and job cuts.

Overall PC shipments, which include notebooks and desktops while excluding tablets, will fall around 10 percent this quarter from the prior three-month period and be little changed or slightly higher next quarter, Wang said today. Fourth-quarter shipments will be higher than in the third quarter, he said.

Acer will ship 800,000 of its Iconia tablets this quarter and a similar amount in the third quarter, Wong said.

To contact the reporters on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net; Chinmei Sung in Taipei at csung4@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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