Acer woes set to continue through the rest of 2011

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Acer woes set to continue through the rest of 2011

Simon Quicke

This year is going to be one to forget for Acer as the vendor expects little from it financially as it sorts out inventory issues and beds in a fresh management team tasked with turning the fortunes of the struggling hardware player around.

Q2 numbers that were worse than expected were accompanied with a realistic assessment of what the rest of the fiscal year would hold for the manufacturer indicating that as far as 2011 goes it's best to describe it as a period of transition. It marked the first time the vendor had reported a quarterly loss.

"Under a new strategy, Acer's business model is changing from monitoring product sell-in only to include the final product sell-through, which means to keep closer watch on the market end for better total inventory control. In Q2 Acer made efforts to further downsize channel inventory due to stagnant European and US economies, and the slow PC market. Additionally, the company paid considerably in senior executive severance pay. Consequently, Acer suffered higher than expected loss in Q2," the vendor stated.

Consolidated revenue was down by 32% and the vendor reported a net loss of T$6.79bn with inventory issues and severance pay to former managers as it cleared out its leadership having a direct impact on the bottom line.

In a conference call chairman JT Wang said that it would see a loss in the third quarter, but not as bad as the second, but it would not be possible to break even this fiscal year.

"In Q3 2011, Acer expects revenue growth and improved gross margin quarter-on-quarter (QOQ). As for Q4 2011, Acer anticipates a stable business operation and better gross margin from Q3," the firm stated.
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