* First quarterly loss in company history
* "Impossible" to break even in full-year - chairman
* Q2 net loss T$6.79 bln vs consensus T$3.3 bln loss
* Chairman sees tablet PC 'fever' receding, notebooks
* Shares close down 2.9 pct ahead of announcement; broader
market down 0.6 pct
(Adds company comment)
By Clare Jim
TAIPEI, Aug 24 Taiwanese PC maker Acer Inc
reported a worse-than-expected quarterly loss, the
first in company history, as it took charges to
reorganise in a troubled first half, and said it would be
impossible to break even for the full year.
Acer has been a dominant force in the PC business,
particularly in the low-cost notebook segment, but has failed to
counter the runaway success of tablets such as Apple's
hot-selling iPad that have cut into PC sales and hurt profits.
The company has been refocusing on mobile devices to drive
growth after a first half that saw the acrimonious departure of
its chief executive following a row over the company's strategy
and a series of cuts to its shipment forecasts.
Shares of Acer, the world's No.2 PC vendor, closed down 2.92
percent on Wednesday ahead of the earnings announcement.
They have fallen 65 percent this year in a broader market
down 16.4 percent. Rival Asustek has gained
Chairman J.T. Wang told an investor conference that the
second-quarter was a "correction period" and its loss was worse
than expected because the company cleared up excessive inventory
and made severance payments for senior management resignations.
Among those who resigned was Gianfranco Lanci, the
former CEO who left abruptly in April amid a row over strategy
and after a sharp cut in Acer's revenue outlook that triggered
an 18 percent fall in its shares in four days.
Wang did not say how much Lanci received.
The chairman said while he expects the "fever" for tablet
PCs receding and notebooks regaining consumer interest, Acer
will still see a loss in the third quarter, though it would be
better than the second quarter.
"Today I have to say, trying to break even this year becomes
impossible," Wang said, citing a worsening macro environment in
Europe and the need for "more time and effort" for the
In July, Wang had indicated that the company would report a
loss in the second quarter before returning to profit in the
third and posting a small full-year profit.
Acer said in June it would take a $150 million charge to
write off inventory and doubtful payments in Europe and will cut
300 jobs there.
Macquarie analyst Andrew Chang said in a report that recent
checks indicate Acer has no new competitive products to launch
in the third quarter to lift momentum and margins.
Macquarie expects flattish revenue growth in the third
quarter from the previous quarter and a 29 percent drop from a
Acer posted a net loss of T$6.79 billion ($234.3 million) in
April-June, much wider than the consensus forecast of a T$3.3
billion loss from six analysts polled by Reuters.
The unaudited net loss figure compared with a net profit of
T$1.19 billion in the first quarter and earnings of T$$2.65
billion in the same period a year ago.
In the longer term, Acer might benefit from U.S. rival
Hewlett-Packard Co's plan to spin off its personal
computer business, analysts say.
"Acer should benefit from HP's share the most in Europe
because it's the second biggest in consumer space in the region.
Where Dell would benefit in the U.S. and Lenovo
in Asia," HSBC analyst Jenny Lai said.
But Acer's sharply fallen margin has to go back to the
normal level first, otherwise a rise in shipment would not help
its profit much, she said.
HP, the world's largest PC brand, said last week it is
exploring the possibility of spinning off its Personal Systems
Group, a business valued by some analysts at $10-$12 billion.
Commenting on the plan, Wang called it a "natural
development in the U.S. Wall Street value system."
"They don't like low margins, low profits; their investors
will hold management to do such kinds of things. This kind of
trend will not change on Wall Street for maybe the next 10
years," he said.
Acer President Jim Wang said the company will try its best
to satisfy its customers' needs, "including HP's existing
customers." He did not elaborate.
Macquarie's Chang said a turnaround for Acer could be
possible next year if it could normalise sales in Europe, boost
share in China's corporate PC market, launch new products at a
quicker rate and grasp the new wave when Microsoft
formally launches Window 8 next October.
(Editing by Vinu Pilakkott)