by Cassandra Mooshian, Research Analyst
TBR expects a bumpy road ahead for Acer after its president/CEO’s resignation, which is effective immediately
Acer CEO and President Gianfranco Lanci resigned on March 31, 2011, effective immediately. Chairman J.T. Wang will temporarily fill Lanci’s role as president and CEO of Acer, Inc., while Walter Deppeler, current senior corporate vice president, will take on Lanci’s role as president of Acer EMEA, the company’s largest market.
TBR believes the resignation, whether prompted by Lanci himself or the board of directors, was a direct result of the disparity between Lanci’s aggressive nature (specifically in the tablet arena) and the board’s conservative disposition. For months, Lanci and the Board partook in several conversations that revealed mismatched goals for the company in terms of scale, growth and brand positioning, to name a few. Different viewpoints on these key issues create a fundamental divide within the company, hindering its success in key growth markets, namely handsets and mobile devices.
Without Lanci, Acer is at a disadvantage in the mobile device arena
TBR believes Lanci was acutely aware of rapidly declining netbook demand (the company’s prior growth outlet) and planned to augment declines by aggressively pursuing advancements within the market for mobile devices. We believe this abrupt change in management has made things noticeably worse for an inside-of-the-box company in a market full of competitors capitalizing on consumer demand. Interim CEO J.T. Wang indicated the company will remain committed to its core line of business of traditional PC form factors, while he plans to “invest cautiously” in the mobile device market. TBR believes mobile devices are the key to vendor success in the market and believes Acer’s cautious strategy puts the company at a significant disadvantage.
Regarding Acer’s mobile device strategy, Wang says, “In this new ICT industry, Acer needs a period of time for adjustment. With the spirit of entrepreneurship, we will face new challenges and look to the future with confidence.” TBR believes Wang is underestimating the new challenges Acer will face in coming months. Lanci brought growth to a company historically over committed to traditional PC form factors with the introduction of handsets and mobile devices. TBR expects weak consumer demand for traditional PCs on a global basis, particularly for netbooks, as tablets increasingly dominate consumer markets, coupled with the loss of Lanci’s go-getter spirit, will cripple Acer’s success in the market going forward. We believe pure-play PC vendors will not survive in a market dominated by first-movers.
Acer is now positioned as a prime target for acquisition by larger vendors
TBR believes Lanci’s resignation positions Acer as a key acquisition target. We believe there is significant opportunity for Lenovo if it were to acquire Acer, as the companies are complementary to each other. Lenovo is a key player in the Chinese market for enterprise PCs and would gain a consumer play on a global basis, as Acer’s consumer strategy is particularly strong in China and EMEA.
Please feel free to use this content or call/email Cassandra Mooshian (603-758-1827) for additional commentary.