Acer writes off $150m inventory and axes staff to get back on track


Acer writes off $150m inventory and axes staff to get back on track

Simon Quicke

Acer has taken drastic action to get its self back on track swinging the axe on 300 EMEA staff and announcing a $150 write-off to clear its high channel inventory.

The moves are being made by the CEO J.T Wang, who has bid his own remuneration goodbye as he authorizes the write-off.

The moves are the first indication that Wang, who stepped into the CEO shoes after Gianfranco Lanci stepped aside at the end of March, intends to wrestle the vendor back to winning ways.

The series of announcements, which were all issued this afternoon, indicate the seriousness with which the vendor is taking its current position, where it has lost revenues and market share, and its determination to correct the situation.

In a statement over the employees, of which 300 will be taken out of the EMEA organisation, the vendor stated: "Taking prompt action to meet the market change and to face challenges ahead, Acer hopes that by lowering operating expense, the company can sooner get business back to the right track for growth."

But the channel will be more interested in the implications of a one-time $150m write-off of stocks to clear the high inventory levels.

The vendor is giving its EMEA channel a sales allowance of $150m to write-off inventory which has been building up in freight warehouses.

The decision was taken after internal audits revealed there was a problem that had to be addressed.

"The new management team carried out internal audits of EMEA operations and discovered abnormalities in terms of channel inventory stored in freight forwarders' warehouses, and in accounts receivable from Spain," stated the vendor.

In addition to the job cuts, inventory write-off and CEO choosing not to take remuneration the rest of the board also agreed to a 50% cut in their remuneration and cutting the employee bonus to 40%.

In calendar Q4 numbers, Acer reported group revenues of $4.7bn (£2.92bn), down 11% year-on-year and operating income of $139m (£86.3m), down 11.7%. More recently, it warned PC revenues in Q1 will decline around 10% due to the impact of tablets.

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