Acer CEO Steps Down After Bruising Results

Acer continues to feel the pain from the intense competition provided by Apple and Samsung in the highly competitive mobile device space.

To this end, the company is preparing to undergo its latest restructuring effort that will include cutting 7 percent of its workforce, ditching products, as well as finding a new CEO.

Harsh Challenges

On the same day that Acer officials released quarterly financial numbers that were significantly worse than had been expected, J.T. Wang resigned his post as CEO, giving way to President Jim Wong, who will have to oversee the corporate restructuring initiative.

Acer, which less than four years ago – flush from the success of its netbooks sales – was expecting to challenge Hewlett-Packard and Dell in the PC market, has found it difficult to keep up in a rapidly changing marketplace driven by the popularity of Apple’s iPad and other tablets running Google’s Android mobile operating system.

The third quarter exemplified those troubles. The company saw revenues fall 11.8 percent over the same period last year, to $2.11 billion (£1.3bn), and losses grow to $86.6 million (£54m). According to Acer officials, much of the loss came from the company ramping up for the release of Microsoft’s Windows 8.1 OS. For the first three quarters, revenues were $9.22 billion (£5.7bn), down 16.6 percent during the same time in 2012, with losses amounting to $106.3 million (£66m). In the fourth quarter, company officials expect shipments of its notebooks, tablets and Chromebooks to fall another 10 percent compared with the third quarter.

It was under those economic conditions that Wang tendered his resignation.

“Acer encountered many complicated and harsh challenges in the past few years,” Wang said in a statement. “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.”

He said that he had worked with Acer’s management team on a “far-reaching plan for Acer’s transformation. … I feel optimistic toward Acer’s future. The management team promises to carry out the internal restructuring and will work closely with the [board of directors] on the corporate transformation.”

Company ‘Transformation’

That transformation will include cutting 7 percent of the company’s global workforce in hopes of saving $100 million (£62m) annually. It will result in a one-time charge of $150 million (£93m), according to the company. It’s unclear how many jobs will be cut; on Acer’s corporate Website, it says there are 7,500 employees, but that is of March 2011.

Acer directors have created a Transformation Advisory Committee that will include board member Stan Shih as chairman and Acer co-founder George Huang as executive secretary. Committee members will propose changes to the board of directors for approval and will work with the company’s management to carry out the changes.

“After making structural adjustments, we will introduce more competitive products within the existing PC, tablet, and smartphone business and stabilize our market share,” Shih said in a statement. “This will be the basis of our transformation and for developing new business opportunities.”

Hot Seat

Wang had been CEO since 2011, when Gianfranco Lanci resigned after disagreements with board members over the direction of the company. During his tenure, Acer went hard in several directions, including tablets and Ultrabooks. Wang also was among the more vocal CEOs who were angered by Microsoft’s decision in 2012 to come out with the Surface tablet, a move that essentially put Microsoft into direct competition with many of its partners. He was quoted in the Financial Times saying that Microsoft should “think it over” before launching the Surface.

“It will create a huge negative impact for the ecosystem and other brands may take a negative reaction,” he said. “It is not something you are good at so please think twice.”

Most recently, in August Acer President Wong said during a conference call that the company was planning to spend more money and effort on Android-based mobile devices and Google Chromebooks, and spend less time PCs running Windows 8.

“We are trying to grow our non-Windows business as soon as possible,” Wong said. “Android is very popular in smartphones and dominant in tablets. … I also see a new market there for Chromebooks.”

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Originally published on eWeek.