Acer Posts Lowest Profit in 6 Years as Notebook Sales Slow

Acer Inc. posted its smallest quarterly profit in more than six years after slowing demand for low-cost notebooks caused sales to miss estimates and prompted its president to quit last month.

First-quarter net income at the world’s second-largest supplier of notebook computers declined 64 percent to NT$1.2 billion, from NT$3.29 billion a year earlier, according to Bloomberg calculations based on a statement from the Taipei-based company today. The average of nine analysts’ estimates made in the last 28 days was for net income of NT$1.74 billion, according to Bloomberg data.

Acer promoted global IT operations chief Jim Wong to the post of president after Chief Executive Officer Gianfranco Lanci resigned last month. Chairman J.T. Wang plans to restructure the company to focus on developing products beyond laptops, which account for 73 percent of sales. Shipments may decline for a third straight quarter in the three months to end-June, the Taipei-based company said this week.

Consolidated sales dropped 21 percent from a year earlier to NT$127.8 billion, according to Bloomberg calculations. Operating profit, which comprises income from its primary business of designing and selling electronics, fell 56 percent to NT$1.93 billion. Net income is the smallest since the second quarter of 2004.

The shares have declined 43 percent this year to NT$51.10 at the 1:30 p.m. close of trading in Taipei today, compared with an unchanged benchmark index. Acer lost its position as the largest maker of portable computers in the fourth quarter and its share of the overall market dropped again in the first quarter, according to research firm IDC.

Chairman’s Apology

Acer said on March 25 that sales in the Jan. to March period would miss its earlier guidance, the second quarter in a row it cut its forecast. The company announced Lanci’s resignation a week later. Chairman Wang said this month that the board and Lanci clashed over strategy and apologized for successively revising its sales guidance.

Wong, a 25-year Acer veteran, was also tasked with heading the company’s new Touch Business Group, which will oversee the development of tablet computers and mobile phones. The company’s first tablet, the Iconia Tab A500, went on sale on April 8.

Acer will hold an investor conference April 28 in Taipei, hosted by Wang, Wong and Chief Financial Officer Tu Che-min.

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