Skip to main content

Struggling Acer prepares to make a loss

Taiwanese PC maker Acer has confessed that it doesn't expect to make a profit in its current financial year, underlining the difficulties the outfit is experiencing.

Just a year ago, Acer was within touching distance of of long-term objective - to become the worl'ds 'number one' shipper of PCs.

Since then, the traditional PC market has seen growth constrained as consumers turn to smartphones for their daily Internet fix. Tablets are the new must-have gadget and while Acer does make both tablets and phones, it does so half-heartedly - just to add them to its product mix.

The firm doggedly pursued a 'multi-brand' approach, under the leadership Giangranco Lanci, to good effect - re-establishing the Gateway brand in the US in which Acer was long under-represented and pushing its other brands into Europe and the Far East. Having cottoned on to the branding game the outfit pushed itself into the limelight with high-profile sponsorship deal of the likes of Ferrari's Formula One team and the Olypmics.

But somewhere along the line, the wheels began to drop off. In March, Gianfranco Lanci fell on his sword, citing a rift with the Acer board. His immediate replacement was chairman of the board J. T. Wang who said: "The personal computer remains the core of our business."

He added: "We have built up a strong foundation and will continue to expand within, especially in the commercial PC segment. In addition, we are stepping into the new mobile device market, where we will invest cautiously and aim to become one of the leading players."

Lanci had been urging the firm to heavily invest in product development recognising that the market was changing.

Acer having for so long set its sights on becoming the world's bigger PC maker was unable to adapt. The Italian management team came under pressure, in what Lanci alluded to as the re-Taiwanisation of the company.

Now, chief executive J.T. Wang has blamed falling demand for notebook PCs for an ailing financial outlook. "The new judgment is that under current circumstances it will not be possible to break even," Wang said in a conference call. He also said a weakening global economy was a factor - an attempt to cast blame outside the boardroom.

Acer posted a net loss of 6.8 billion NTD (US$234.4 million) in the quarter ending June 30. numbers that were hit by inventory building up in European channels.

To make matters worse, market watchers at IDC reckon Acer has slipped to number four spot in the PC makers' top ten dropping behind perennial foes Dell and Lenovo. HP remains king of that pile, but for how long?

Acer's branding strategy may have been making headway, but a past master at that game has headed the outfit off at the pass - that master has an apple-shaped logo.