Acer to Save $100 Million Annually From Planned Job Cuts
Acer will cut 7 percent of its global headcount, resulting in savings of $100 million annually starting next fiscal year, as part of a restructuring plan, it said Monday. The Taiwan computer maker now has 8,000 employees globally, said spokeswoman Lisa Emard.
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Acer expects that it will take a one-time restructuring charge of $150 million in Q4 this year, it said. The company also reported weaker sales than a year ago for Q3 ended Sept. 30 and said CEO J.T. Wang is resigning and will be replaced by Corporate President Jim Wong, effective Jan. 1.
A “comprehensive” restructuring plan was developed by Acer management and, “without delay,” the board will start a “corporate transformation,” it said. In addition to reducing manpower, the plan calls for unspecified “product plan termination,” with “related product tooling and legal fees,” it said. Due to an “adjustment” in brand strategy, Acer expects Q4 shipments of notebooks, tablets and Chromebooks to decrease 10 percent from Q3, it said in an earnings release. Gross margin, however, is expected to improve, it said.
Q3 revenue fell 11.8 percent from a year ago to $3.1 billion. Acer posted an operating loss of $86.6 million after reporting an operating profit of $11.8 million in Q3 last year. Due to a non-cash related intangible asset impairment of $335.1 million, Acer reported a net loss of $442.2 million, it said. The operating loss was mostly due to the “gross margin impact of gearing up” for the Windows 8.1 launch and the related management of inventory, it said.
Acer “encountered many complicated and harsh challenges” in the past few years, Wang said in a separate news release announcing his resignation and the company’s restructuring plan. After the “consecutive poor financial results,” it was “time for me to hand over the responsibility to a new leadership team,” he said. The past two to three years have been “extremely tough” for Acer because of the “rapidly changing industry and market conditions,” it said.
The Acer board set up a Transformation Advisory Committee with board member Stan Shih as chairman and Acer co-founder George Huang as executive secretary. The committee will “propose changes in the company vision, strategy, and execution plans” for the board’s approval, said Acer. To support new development needs, the board approved the issuance of 136 million new common shares for a capital increase in cash, it said. “After making structural adjustments,” Acer will “introduce more competitive products within” its PC, tablet and smartphone business and “stabilize” its market share, said Shih. That “will be the basis of our transformation and for developing new business opportunities,” he said.
Acer was No. 4 in global PC shipments during Q3, its shipments falling to 5.5 million units from 8.3 million in Q3 last year, IDC said last month. Acer’s market share fell to 6.7 percent from 9.5 percent, said IDC.