By Jennifer LeClaire / CIO Today. Updated November 05, 2013.
He's being called another victim of the iPad. J.T. Wang, chairman and CEO of Acer, has resigned his post in the wake of the company's consistently poor earnings reports.
Although Wang will still sit in the board chair role until next June, the search committee has already found his replacement: Corporate President Jim Wong will take the CEO reins on Jan. 1. Beyond the C-suite shake up, Acer's management team is also developing what it calls a "comprehensive restructuring plan."
"Acer encountered many complicated and harsh challenges in the past few years," Wang said. "With the consecutive poor financial results, it is time for me to hand over the responsibility to a new leadership team to pave the way for a new era. I feel optimistic toward Acer's future. The management team promises to carry out the internal restructuring and will work closely with the Board on the corporate transformation."
How Acer Lost Its Advantage
Can Acer make a comeback? Charles King, principal analyst at Pund-IT, told us nothing is impossible. But market dynamics have changed dramatically since Acer entered the picture with its extremely low-cost, budget-conscious netbooks.
"The issue for Acer from a competitive standpoint is that with the price of PCs and tablets and other components dropping so precipitously -- and the market for traditional PCs experiencing so much commotion -- we're seeing far better-known companies who sell products that are generally better reviewed than Acer's being extremely competitive in their own pricing," King said.
His point: If standard PCs and tablets were selling for several hundred dollars more today, being the low-cost leader would be a defensible position. When everybody is racing toward the bottom on pricing, he said, it makes it really tough on the vendors depending on low prices to bring them business.
"I saw a couple of headlines today suggesting Acer is being driven out of business by the iPad. I don't think the iPad was their biggest problem," King said. "I think the big problem was the corner of the market where Acer was standing alone is getting more and more crowded."
Acer's Restructuring Plan
Acer's board has 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. To support the new development needs, the board has approved the issue of 136 million new common shares for a capital increase in cash.
"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. "This will be the basis of our transformation and for developing new business opportunities."
Acer's personnel and business restructuring plans include reducing manpower, product plan termination with related product tooling and legal fees, resulting in a one-time cost of $150 million which is expected to be reported in the fourth-quarter financial results. Acer will cut its worldwide employees by 7 percent, resulting in operating expense savings of $100 million annually from 2014.