Acer to Focus on Computer Hardware for Turnaround, New CEO Says

Acer Inc. (2353), the Taiwanese personal computer maker that is set to post a third-straight annual loss, plans to build on its hardware background to turn the company around, Chief Executive Officer Jason Chen said.

“We need to dig ourselves out of a hole,” Chen, who took over as CEO and president on Jan. 1, told reporters at the company’s headquarters in Taipei yesterday. “Operational excellence” will be the key to doing so, he said.

Founder Stan Shih, 69, in November returned as chairman at the company he started after declining market share and losses at Acer led to the departure of J.T. Wang, the man who replaced him more than a decade ago. Last month the PC maker announced a strategic change toward providing hardware, software and services, harking back to an offering called MegaMicro first unveiled when Shih previously led the company.

Acer was the worst hit among the top-five vendors by the largest annual PC shipment decline in history as its sales volume dropped 28 percent last year, according to Gartner Inc. Only Lenovo Group Ltd. (992) among the leading computer makers posted an increase in shipments in a market that slid 10 percent, the Stamford, Connecticut-based researcher said.

Photographer: Maurice Tsai/Bloomberg

Jason Chen, chief executive officer of Acer Inc., left, speaks as Stan Shih, co-founder and chairman, looks on during a news conference at the company's headquarters in New Taipei City on Jan. 13, 2014. Close

Jason Chen, chief executive officer of Acer Inc., left, speaks as Stan Shih, co-founder... Read More

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Photographer: Maurice Tsai/Bloomberg

Jason Chen, chief executive officer of Acer Inc., left, speaks as Stan Shih, co-founder and chairman, looks on during a news conference at the company's headquarters in New Taipei City on Jan. 13, 2014.

Shares of Acer fell 0.8 percent to NT$18.45 in Taipei trading yesterday before Chen’s comments. The stock has slumped for four straight years after more than doubling in 2009.

A NT$13.1 billion ($437 million) third-quarter loss, spurred by the writedown on past acquisitions, means Acer is set to post its third annual loss. The average of 25 analyst estimates compiled by Bloomberg is for a net loss of NT$14.3 billion in 2013.

Full-year 2013 sales fell 16 percent to NT$360.2 billion, the company said Jan. 10, or 43 percent less than the peak in 2010.

Ultrabooks Misstep

Acer’s biggest mistake was to invest too early in ultrabooks -- thin, light notebooks that mimic Apple Inc.’s MacBook Air -- as well as touch-screen technology at a time when the market for such devices didn’t yet exist, Chen said.

To turn the company around, Acer plans to build on its existing hardware and software skills. Its new business model will debut on April 1 when notebooks will be released offering its forthcoming Build Your Own Cloud service, he said.

“We need to find how to add value to hardware with mail, photo, video and other things we haven’t even seen yet,” he said. “We’ll start from our competitive advantage and go from there.”

Photographer: Lam Yik Fei/Bloomberg

Acer Inc. products are displayed for sale inside an electronics store in Taipei. Close

Acer Inc. products are displayed for sale inside an electronics store in Taipei.

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Photographer: Lam Yik Fei/Bloomberg

Acer Inc. products are displayed for sale inside an electronics store in Taipei.

Data Centers

Acer is already strong in data-center services and security, said Chen, an MBA graduate from the University of Missouri who previously worked as vice president of sales and marketing at Taiwan Semiconductor Manufacturing Co.. (2330)

Among Shih’s first decisions after returning to the company was to buy a 15.6 percent stake in the online payments unit of Taipei-based PChome Online Inc. (8044), a Taiwanese website and e-commerce provider. The companies didn’t disclose the value of the investment when it was announced last week, while Shih said he expects Acer to offer the venture’s services within a year.

The PC maker plans to reallocate resources and boost spending on marketing as well as research and development, Shih said last week.

Speaking to reporters for the first time since he took office, Chen said it’s too early for him to outline the company’s new strategy. He declined to say if he’ll spend more on research and development or on marketing.

“We aren’t excluding any possibilities to get where we want to go,” he said. “We want to get to Build Your Own Cloud.”

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Bruce Grant at bruceg@bloomberg.net

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