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Acer Forced To Slash Brand Values As Company Wallows

Last year Acer Australia lost two senior managers, General Manager Nigel Gore and former Marketing and Business Development Manager Robin Tan. Their exit from the Company followed a major sales slump, “right across their Australian operation” said one source.

In 2011 the Company reported a $228 Million dollar loss; the 2012 losses are expected to be significantly higher.

Acer global sales have slumped from 9.5% last year from 10.2% in 2011 and 12.4% the previous year. In comparison Samsung has grown their share of the PC market by 50%. Also stripping share from Acer has been Apple.

In the B2B market Lenovo and HP have stripped share away from the struggling PC Company.

Acer, who did not exhibit on the CES show floor unlike Lenovo, Toshiba and Samsung, instead chose to entertain retailers at the Hard Rock Cafe.

In Australia Acer has struggled in the tablet markets and were denied access to the smartphone market by carriers and retailers.

“We are sceptical about the assumptions behind the impairment test, given the write-down does not include anything from goodwill,” UBS chief electronics hardware analyst Arthur Hsieh said in a note to clients overnight. “With Acer’s declining market position, the acquired entities, including Packard Bell, machines and Gateway clearly did not generate the expected cash flow that Acer had originally projected when it made all those acquisitions.”

Hsieh added that there is limited room for Acer to cut operating expenses given that it is already one of the most tightly run companies in the industry. As a result, he believes Acer’s thin profit margin could easily “turn red” should its competitors price their products more aggressively.

Bank of America Merrill Lynch maintained its “underperform” rating for Acer, adding that the company has already missed a window for winning back market share as the overall PC market would see an annual decline this year.

The bank believed that Acer is still searching for a viable business model in the “post-PC era” and has yet to show signs of a recovery in its fortunes.

 World-wide PC shipments for the fourth quarter last year fell 6.4% from a year earlier to 89.8 million units, worse than the predicted decline of 4.4%, according to IDC.

The Wall Street Journal said that unlike bigger rivals such as Lenovo Acer benefits less from economies of scale, and its push into the smartphone and tablet-computer market has so far been unsuccessful. The company is trying to turn around by offering a wider variety of touch-controlled mobile devices, and by revamping its marketing strategy.