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By | Paul Kunert 17th January 2014 15:28

Acer writes off MEELLIONS again, scraps raw materials

CEO grabs shovel in bid to 'dig' itself out of a profit-less hole

Beleaguered PC maker Acer is back in the red again after scrapping millions of pounds worth of raw materials inventory as the first move to "dig" itself out of a deepening hole.

With a new broom on board - the latest CEO Jason Chen was plonked into the top job back in December - operating under the gaze of founder and returning chairman Stan Shih, Acer is working towards a brighter future. At least that is the plan.

And to accelerate the "corporate transformation", the once high-flying Taiwanese PC re-brander has written off NT$1.3bn (£263m) of components.

"This latest write-off will help optimise the company's operational management. Taking immediate action, Acer will formulate its product strategy with more caution and implement precise production planning and inventory control," the vendor told us.

If this all sounds a little familiar, that is because after the last write-off of ageing inventory in mid-2011, caused by a volume-driven creaking supply chain that was unable to react to a market slowdown, Acer initiated a review of the business and said it had refined processes to tighten controls.

It has reported quarterly losses or tiny profits ever since, hit by the shift to tablets and a massive slowdown in consumer PC sales, and fierce competition from rivals that saw it slide down the vendor rankings.

The latest write-down pushed Acer into wider operating losses of NT$8.2bn (£166m) for Q4 versus NT$2.57bn in Q3 and NT$109m (£2.4m) reported for Q4 2012.

Revenues declined 5.9 per cent quarter-on-quarter to NT$86.7bn (£1.75bn), and crashed 14.5 per cent compared to the NT$101.5bn (£2bn) recorded in the same quarter a year earlier.

At the start of this week, Chen addressed analysts for the first time as CEO but talked more about its past and current problems than future solutions

Our PR man at Acer told us Chen is reviewing operations to understand "how to get their (goals)" but did not detail "turnaround plans".

Acer told us the reason for its "poor performance" was due to the "too early" investment on Touch and Type devices and Ultrabooks, neither of which have taken off due to the price premium.

"Acer acknowledges missteps in the past on resource allocation, and the over expectation of Ultrabooks and notebooks with touch panel. Although the products were leading in design they did not accurately fulfil market needs."

The firm's PR man stuck to Chen's metaphor, saying: "We need to dig ourselves out of this hole through operational excellence".

Acer already has the lowest operating expenditure of any major PC player, employing a little less than 8,000 folk worldwide, although the wage bill became a little lighter before Chrimbo.

This was due to the exit of then head of commercial business Walter Deppeler, CTO Arif Maskatia and Dave Chen, who led the smartphone biz in China.

The PR hand said that senior execs have agreed to take a 30 per cent salary cut to "share responsibility" for the company's woes.

The preliminary full-year numbers don't make for pretty reading: sales fell 16.2 per cent year-on-year to NT$360.1bn (£7.27bn), the operating loss came in at NT$11.37bn (£230m) compared to an operating profit of NT$1.03bn (£2m) in 2012 and the loss after tax was NT$20.58 (£41.5m), versus NT$2.91bn (£58m).

Acer's PR man told us that Acer is perceived as a "trusted brand" and a "little bit 'liked'", but the goal is to be perceived as "50 per cent trusted, 40 per cent liked and 10 per cent respected".

Confused? So are we. ®

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