Taiwan's Acer Inc named insider Jim Wong as its new corporate president after the abrupt departure of its previous chief executive last month, giving him special responsibility for developing mobile devices to power future growth.
Acer, the world's No.2 PC vendor, has been a dominant force in the PC business, particularly in the low-cost notebook segment, but has failed to counter the runaway success of the tablets such as Apple's hot-selling iPad, which have eroded its profits.
Former Chief Executive Gianfranco Lanci left the company on March 31 due to differences over the strategy needed to deal with the tablet challenge, one that Wong will take on through a new business unit aimed at making inroads into the mobile sector.
The appointment of Jim Wong is positive for the stability of management as he has been a senior executive in Acer and headed the mobile products business, said Vincent Chen, an analyst at Yuanta Securities in Taipei.
The company will develop data-consumption products, tablet PCs and smartphones, the statement said.
Touch/mobile devices open up a host of new opportunities. They form Acer's new business and growth engine for the future, Wong said in a statement on Tuesday.
In a sign of the size of the challenge, Acer cut its forecast for shipments this quarter to a 10 percent fall over January-March. Last month it had forecast shipments would be about the same as the previous quarter.
It cited its recent reorganization, inventory adjustment and a seasonal slowdown in the PC industry as reasons rather than the growth of tablets and added that its operating margin in the second quarter would be about the same as the first quarter.
The shipment forecast is specific to Acer, not industry-wide, said Yuanta's Chen. It must be because its inventory is still very high and Acer may be forced to take some measures such as cutting prices. Its stock price is still under pressure.
Acer launched its new tablet PC, the Iconia Tab, in February and the company said last month that new tablet models scheduled to launch in the second quarter may improve sales. Earlier this year, it said it aimed to sell 6 million tablets in 2011.
Last month, shares of Acer plunged almost 18 percent in four sessions after it said first-quarter sales would be worse than expected and second quarter sales would be flat, triggering a wave of analyst downgrades.
Lanci's departure came a week after the sales forecast.
Chairman J.T. Wang will remain as chief executive, running the company jointly with Wong.
Wong was previously Acer's corporate senior vice-president and president of the IT products group. Born in 1958, Wong joined Acer in 1986 and holds an MBA from Emory University in the United States.
Acer needs a leader who is familiar with technology, as well as understanding the market. We reviewed Jim's potential and agreed he would fit well in the role, Wang said in the statement.
(Reporting by Jonathan Standing and Argin Chang; Editing by Jacqueline Wong)