Acer Inc shares were down on Wednesday following a few announcements made by the company that were not much welcomed by the investors. The PC maker announced a new restructuring plan, a new chief executive and a 7% reduction in the headcount, owing to a weaker performance in the quarter.
At the start of trading, shares of Acer were down to 6.9% at T$16.9, which is the maximum allowed in a session, but were up 0.2% in a broader market, says Reuters.
Wong to replace Wang
Jim Wong, who is presently Acer’s corporate president, will replace J.T. Wang as chief executive while the latter will remain chairman till June.
Acre faced many difficulties in last few years and “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,” Wang said in a statement.
Analysts lower price target
Citi analysts lowered Acer’s price target to T$13 citing restructuring plans may not able to change the company’s outlook. However, analysts believe that reducing operating expenses by trimming labor will give management time to re-position the business model.
The company’s plan to trim workforce by 7% will save about $100 million yearly starting from 2014. The company presently has 8,000 employees.
The PC maker is facing low demands for laptops, which is a significant part of the business. Globally, the sales of laptops decreased 9.5%, in the third quarter of 2013, according to IDC research.
Loss, wider than expected
Acer told in a statement “Q3’s operating loss was mainly due to the gross margin impact of gearing up for the Windows 8.1sell-in and the related management of inventory.”
For the quarter, Acer posted a net loss of T$13.12 billion, which was well above the analysts estimates of T$109 million. The primary factors contributing to the loss were increased expenses and inventory costs on account of new Microsoft operating platform. For the second quarter, net loss was T$343 million while for the same quarter a year ago, Acer posted a net profit of T$68 million.
Acer, for the fourth quarter, told changes in the brand strategy will reduce the shipments of Notebooks, tablet PC’s and chrome books by 10%, but the gross margin are expected to improve.