Acer Should Overhaul Its Operation: Stan Shih

Mar 30, 2011 Ι Industry In-Focus Ι Electronics and Computers Ι By Philip Liu, CENS
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Taipei, March 30, 2011 (CENS)--In view of the impact of smart phones and tablet PCs on the PC market, Acer Inc., Taiwan's leading PC supplier, should overhaul its operation to seek higher profit margin, rather than seeking the championship in the global PC market, said Stan Shih, founder of Acer Group yesterday (March 29).

Shih made the remark in the wake of the downward revision of its sales targets by Acer for two straight quarters, saying that the overhaul must be taken quickly, since Apple's products have brought new perspective to the hi-tech field. With the change in the external environment, Acer's long-standing winning formula may have to undergo a major change.

He put forth the suggestion at an event of the National Culture and Arts Foundation, for which he served as the chairman, saying that Acer has overhauled its operation once about every 10 years, to cope with change in the external environment. It's about time to undertake the overhaul, the third in its history, which will be easier than the previous two, according to Shih.

Acer announced last Friday (March 26) downward revision of its first-quarter sales target to 10% decline, a far cry from the original forecast of 3% growth. In the wake of the announcement, the share price of Acer dropped by the daily limit of 7% yesterday, for the second session in a row, closing at NT$63.1 per share. It is still in the black for the quarter, though.

In recent years, Acer has been striving to become the world's largest PC vendor, in the belief that the goal can help it achieve economy of scale and garner higher margin. Shih remarked that the success of Apple underscores the traditional industrial mode is undertaking a major change, as volume may not have an absolute relationship with profit margin. Therefore, the honor of the world's largest PC vendor may be achieved at the expense of profit margin. He suggested that the PC industry should not single-mindedly pursue volume growth, and should extend its operation to the field of service, just like what Apple has done.
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