Acer to take writedown charge, cut jobs in Europe
TAIPEI (Reuters) - Acer Inc, the world No. 2 PC maker, will take a $150 million charge to write off inventory and doubtful payments in Europe and will cut 300 jobs there in the latest upheaval following the sudden departure of its CEO in March.
In a statement on Wednesday, Acer said internal audits had found "abnormalities in terms of channel inventory stored in freight forwarders' warehouses, and in accounts receivable from channels in Spain."
"It's a surprisingly large write-off to me," said Calvin Huang, analyst at Daiwa Securities.
"It shows that they are not doing very well in the inventory adjustment. They cannot even make $150 million a quarter. It's very likely that Acer will post a loss in Q2."
The write-off added to the bad news since the acrimonious departure of CEO Gianfranco Lanci.
Acer cut its first-quarter PC revenue outlook on March 25, triggering an 18 percent slide in its stock price over the following four days, at the end of which Lanci left.
Less than a month later it cut its second-quarter shipment forecasts and reported a worse-than-expected 64 percent fall in first-quarter net profit. April sales fell 23 percent from a year earlier.
Its shares have recovered somewhat recently but have still fallen 7 percent since March 31, compared with a 4 percent rise in Taiwan's benchmark index.
Acer has been a dominant force in the PC business, particularly in the notebook segment, but has failed to counter the runaway success of tablets such as Apple's iPad.
Lanci's departure followed a clash over how to deal with the tablet challenge.
He publicly criticized some of Acer's board for trying to "Taiwanise" the company while Acer replied that Lanci had "hurt the company's business foundation.
Acer did not say where the jobs would be lost.
Its tribulations in Europe were announced on the same day that Chinese rival Lenovo announced plans to expand in Europe by buying German consumer electronics retailer Medion.
Earlier in the day Acer announced the launch of an ultrabook super-light computer model in the fourth quarter, pushing on with its new strategy of developing mobile devices to power future growth.
It also forecast that devices such as tablets and smartphones would make up a third of revenue by 2015.
President Jim Wong, who now runs the company together with Chairman J.T. Wang, told reporters Acer aims to have the revenue contribution from touch products at 15 percent by 2013 and one third by 2015. Touch products include tablets and smartphones.
Ultrabooks are a new category of notebook launched by top chipmaker Intel Corp. Intel sees them accounting for 40 percent of laptop sales to consumers by the end of next year.
"The ultrabook can help to revive the notebook market," Wong said.
Netbook pioneer and Acer rival Asustek showed its first ultrabook, the UX series, on Monday at the Computex computer show in Taipei.
Acer said in a later statement that Wang regretted the write-off and would give up extra payments he gets as a board member as well as his employee bonus for 2010.
All board members will take 50 percent cuts in their extra payments and the company will cut employee bonuses for 2010 by 40 percent. The bonuses are due to be paid between July and September.
(Reporting by Clare Jim; Editing by Jonathan Standing and David Cowell)
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