Acer Reports Unprecedentedly Huge Loss

Acer Inc. yesterday announced that it suffered an unprecedentedly huge after-tax loss of NT$6.7 billion (US$234 million at US$1:NT$29) in the second quarter, will remain in the red in the third quarter, and will not likely make money throughout this year.

As the gloomy result and prospects missed expectations, the company’s chairman, J.T. Wang, again issued a public apology to the company’s shareholders after the announcement.

Wang ascribed the loss mostly to the combination of lackluster PC markets in Europe and America, the write-off of a US$150 million loss from its profitless clearance sales in Europe, and the US$30 million expense on corporate restructuring.

Industry executives pointed out that grim second-quarter result had further eroded investors’ confidence in the company, which already lowered its financial projections for the fourth quarter of last year and goal for the first quarter of this year.

The company’s consolidated revenue for the second quarter was NT$102 billion (US$3.5 billion), slipping 20.1% from the first quarter and 32% from a year earlier. Its loss for the second quarter was higher than the NT$3-4.5 billion (US$103-155 million) range projected by institutional investors.

Throughout the first half this year, the company had after-tax net loss of NT$5.6 billion (US$193 million), or NT$2.12 per share, on consolidated revenue of NT$229.8 billion (US$7.9 billion). The revenue represented a 26% contraction year on year.

Regardless of downbeat outlook, foreign institutional investors still bought 2.2 million Acer shares yesterday, marking the third consecutive days of excessive procurement of the company’s stocks on the market.

A bright side of the company’s operation, according to Wang, is the company’s inventory backlogs have declined to relatively healthy levels, with the inventories in Europe, Africa, the Middle East and Americas down to around eight weeks and the inventories in Asia Pacific region down to five to six weeks.

In response to speculations that the company would buy Hewlett-Packard’s PC division, Wang said his company will not buy the said division as PC operation is a low-profit business now.

(by Ken Liu)

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