Acer Founder Returns to Computer Maker After Record Loss

Acer Inc. founder Stan Shih returned to run the company he started in 1976 after a record loss and the resignation of leaders he’d entrusted with its management.

Shih came back as chairman and president while Jim Wong, president since 2011, resigned his post and will not take up the role of chief executive officer vacated by J.T. Wang, Acer said in a statement yesterday. The Taipei-based company said Nov. 5 Wong would become CEO and Wang would stay chairman until June.

Shih’s return, nine years after his retirement, marks the culmination of Acer’s ascent and fall as a global PC powerhouse that saw it eclipse Dell Inc. and Hewlett-Packard Co. to be the world’s biggest notebook maker. Its revenue peaked at the end of 2009 as the introduction of Apple Inc.’s iPad and the global financial crisis crimped spending on computers.

Under Wang and then-President and CEO Gianfranco Lanci, Acer spent more than $1.3 billion to buy competitors including Gateway Inc., Packard-Bell and eMachines, helping it become the largest laptop company by the first quarter of 2010.

Acer rose 5.3 percent to NT$16.40 in Taipei trading, paring its loss this year to 35 percent.

“This development will have a short-term impact on trading but we refrain from turning positive,” Arthur Liao, an analyst at Fubon Financial Holding Co. in Taipei, wrote in a report today.

On Nov. 5, the company announced it wrote off NT$9.94 billion ($336 million) from five purchases, adding to a NT$3.5 billion asset impairment it announced in January.

The same day, Acer announced Wang’s resignation and said Shih would lead a new transition committee. Co-founder George Huang also will return to the management team, Acer said yesterday.

Excess Inventory

Its NT$13.1 billion loss for the third quarter is almost double the loss it posted for all of 2011.

Consumer interest in tablet computers, sparked by Apple’s introduction of the iPad, hurt demand for Acer’s own laptops and spurred it to its first loss in a decade in 2011. The company wrote down $150 million because of excess inventory, while Lanci resigned in a dispute over future development and strategy.

Global computer revenue dropped 6.4 percent last year after slowing to 0.7 percent growth in 2011, according to Bloomberg Industries data. Acer’s own revenue fell for each of the past two years and has dropped 17 percent for the January to September period this year.

“Acer did not make the correct decision over the past two years to put more resources into Windows 8 and Ultrabooks, neither of which could help combat declining PC sales,” Liao wrote. “Acer should re-allocate R&D resources to mobile devices (smartphones and tablets) instead of traditional notebooks or desktops.”

Shih’s return mimics that made by Steve Jobs to retake control of Apple, after which the company introduced the iPod, iPhone and iPad, and became the world’s most-valuable technology company.

Acer’s woes also come after Michael Dell completed a management-led buyout of the company he founded in 1984 and listed in 1998. Dell plans to turn the company into a bigger supplier of hardware and software from corporate data centers, as well as mobile technology, from one that’s relied on PC revenues.

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