Acer CEO Steps Down and They Also Lost Almost A Half Of A Billion Dollars Last Quarter
According to a Press Release Acer CEO J.T. Wang is stepping down as CEO. Below you can read the release in it’s entirety.
Acer announces that the resignation of J.T. Wang, Chairman and CEO, has been approved by its board of directors. Wang shall remain in chairmanship until the end of his tenure next June. The Board and The Search Committee also agreed that Corporate President Jim Wong will succeed Wang as the new CEO from January 1, 2014. A comprehensive restructuring plan has been formulated by the Acer management team, and without delay, the Board will commence with its corporate transformation.
J.T. Wang, chairman and CEO of Acer, said, “Acer encountered many complicated and harsh challenges in the past few years. With the consecutive poor financial results, it is time for me to hand over the responsibility to a new leadership team to path the way for a new era.”
Acer’s board of directors stated, “We are very grateful for Wang’s contribution and hard work. The past two to three years have been extremely tough for Acer due to the rapidly changing industry and market conditions. We fully respect Wang’s decision to step down; however, in the interest of ensuring company stability and a smooth transition during this latest restructuring and transformation, we have asked J.T. to remain to complete his tenure as Chairman which ends in June 2014.”
Wang elaborated, “Together with the management team, we have crafted a far-reaching plan for Acer’s transformation. I wish to thank the board members for their support and to Jim for assuming the CEO duties. I feel optimistic toward Acer’s future. The management team promises to carry out the internal restructuring and will work closely with the Board on the corporate transformation.”
Acer’s Board has set up a Transformation Advisory Committee with board member Stan Shih as Chairman and Acer co-founder George Huang as executive secretary. The committee will propose changes in the company vision, strategy, and execution plans for the Board’s approval. They will work with the management team to carry out the transformation to increase shareholder value. To support new development needs, the Board has approved the issue of 136 million new common shares for a capital increase in cash (approximately 4.8% of total shares).
Stan Shih stated, “After I retired from Acer I shifted my attention to promoting public interests. But when J.T. tendered his resignation, the Board turned to me for help. In consideration of personal social responsibility and for Acer’s onward sustainability, I agreed to take on the duty to help the management team with a smooth handover during this transition period.”
Shih added, “After making structural adjustments, we will introduce more competitive products within the existing PC, tablet, and smartphone business and stabilize our market share. This will be the basis of our transformation and for developing new business opportunities.”
Acer’s personnel and business restructuring plans include reducing manpower, product plan termination with related product tooling and legal fees, resulting in a one-time cost of US$150M which is expected to be reported in the Q4’13 financial results. Acer will cut its worldwide employees by 7% resulting in OPEX savings of US$100M annually from 2014.
And according to its earnings report Acer lost about $443M last quarter. Below you can read that release as well.
Acer’s financial results for Q3 2013, approved by its Board of Directors, are: Consolidated Revenue of NT$92.15B (US$3.11B), up 3.1% quarter-over-quarter and down 11.8% year-over-year; an Operating Loss of NT$2.57B (US$86.61M). In addition, due to a non-cash related intangible asset impairment of NT$9.94B (US$335.12M), profit after tax was NT$-13.12B (US$-442.19M), and earnings per share was NT$-4.82.
Q3’s operating loss was mainly due to the gross margin impact of gearing up for the Windows 8.1 sell in and the related management of inventory. In addition, in Q3, there were one time compensation payments related to the long standing eMachines consumers litigation. This is now settled.
The intangible asset impairment loss, which includes trademarks and goodwill, is NT$9.94B (US$335.13M).This impairment, which covers the Gateway, Packard Bell, Founder, iGware and ETen brands, is made in accordance with IFRS (International Financial Reporting Standards) and is reflective of changes in business strategy. The impairment is a non-cash charge and has no impact on Acer’s business operation and working capital.
Acer’s consolidated revenue for the first three quarters is NT$273.50B (US$9.22B), down 16.6% year-over-year; operating losses for this period are NT$3.15B (US$106.3M). Due to the impact of the intangible asset impairment of NT$9.94B (US$335.13M), PAT is NT$-12.95B (US$-436.42M), and EPS is NT$-4.76. After the impairment of intangible assets, Acer’s net value per share is NT$23.1.
Looking at Q4, due to the adjustment on brand strategy, shipments for Acer’s notebooks, tablet PCs and Chromebooks are expected to decrease by 10% compared to Q3, however, the gross margin is expected to improve.
- The spot rate as of November 5, 2013 was used — US$1: NT$29.67.
- Acer Inc. consolidated revenue includes revenues from other companies in which Acer Inc. has 50% or more ownership, and already deducts any revenues between Acer Inc. and these companies to avoid double-counting.
Things are looking kind of shoddy for Acer, which is too bad because I had an Acer laptop and it was pretty decent. Hopefully the company can find its financial footing and figure it out before it’s too late.