Mar 28, 2016

    Acer revamps in bid to serve new growth aces


    TAIWAN'S struggling personal computer maker Acer saw its 2015 earnings plunge by two-thirds as it announced a corporate reshuffle that hives off its new businesses, including cloud services and smart devices.

    Full-year net profit came in at US$18.5 million (S$25.4 million), down 66 per cent from a year earlier, while revenue fell 20 per cent, the company said last week.

    Acer revealed in a separate statement that it would form a holding company to manage its new businesses, which it said would help speed up the "overall company transformation".

    "The new structure will address the diverse development needs of IT hardware products versus cloud services, smart devices and e-businesses," Acer noted.

    It did not give any details as to whether the reshuffle would mean job losses.

    Acer - once the world's second-largest PC maker - has struggled as demand tapered and competition increased from the likes of Apple.

    Analysts say the hiving off of its new businesses will pave the way for any future sale of the company's divisions.

    "By establishing an investment holding company, Acer will likely sell off or introduce new shareholders to any subsidiary company under the holding structure," Fubon analysts said in a note.

    Analysts added that the reshuffle may be part of a succession plan by founder Stan Shih, who returned from retirement for a short stint to salvage the company after it sunk into deep losses.

    His son Maverick Shih was appointed on Thursday to co-head Acer's build-your-own-cloud (BYOC) service and smart device division.

    Still, Fubon said a turnaround for Acer is not happening any time soon as outlook for its core business of selling hardware continues to be bleak.

    "None of this affects our negative view on the company's future, given the end of the PC and slowing smartphone growth, and the lack of any significant server business for Acer," it said.

    The worldwide PC market contracted 10.4 per cent in unit volume in 2015, the worst performance on record, according to market intelligence provider International Data Corporation.