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Acer should focus on business diversification, says CEO
Source: DIGITIMES   Editor: Helan   Update Time :2017/5/19 16:38:06

Commenting on its first-quarter financial results, Acer CEO Jason Chen pointed out that the company did not seem to have made much profit, but that was because the company had invested over 50% of its profits into new businesses, hoping to find new directions for the company. Acer is a PC company and will continue pushing the business; however, the company should establish a business model with more diversifications, Chen noted.

Acer had consolidated revenues of NT$56.05 billion (US$1.86 billion) for the first quarter, down 7.56% on year, while net profits before were a negative NT$57 million, down from a positive NT$76 million in the same quarter a year ago. However, the company's net profits after tax for the quarter returned to positive NT$65 million, helping the company's EPS to reach NT$0.02, flat from those the same quarter a year ago, since a tax payment made by Acer a few year ago was refunded by the Taiwan government and was has declared into the results for the quarter.

Within Acer's first-quarter consolidated revenues, NT$52.77 billion were contributed by IT product businesses, while NT$3.78 billion were from its other businesses. However, the company's IT product businesses together had operating net profits of NT$849 million for the first quarter, while its other businesses combined created losses of NT$258 million.

Chen pointed out that Amazon has been adopting the strategy for its operation and Acer is looking to follow suit and will focus on diversification.

Chen noted that the company's gaming, 2-in-1, ultra-thin and Chromebook product lines are all seeing shipment growth and the company also became the fourth-largest vendor worldwide in the first quarter; however, the company is now looking to expand into new industries such as virtual reality (VR) and mixed reality (MR), in addition to hardware, Acer is also developing software and creating an ecosystem.

For the content, Acer is working with IMAX and planning to firm over 10 VR movies in the next couple of years, while for gaming, Acer is partnering with Starbreeze to develop VR game content with help from movie companies.

As for currency fluctuation and the impact of increasing component prices on the company's profitability, Chen did not comment on currency's influence, but pointed out that the company has seen SSD and DRAM prices increasing rapidly. However, Acer already prepared strategy for the issue and will focus on markets such as the US that can generate better profits.

Acer is currently the largest vendor in Brazil in terms of shipments and over 80% of products Acer sell in the country are high-end models. Three years ago, Acer's goal for Brazil was to provide high price/performance ratio products, but now the company is looking to enhance its brand value and Brazil is the best example for Acer's successful transformation, Chen said.

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