Acer Stock Plummets in Midst of Identity Crisis

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Taiwanese computer giant Acer wants to be like Apple with premium products and high margins. Now it thinks it has a more promising future in tablets, Bloomberg reports.

This is a big change in Acer's strategy. The company has previously focused on high-volume consumer PC business, trying and failing for a long time to overtake Hewlett-Packard as the number one PC manufacturer.

The CEO responsible for the previous strategy, Gianfranco Lanci, resigned yesterday after many disappointing months. During the fourth quarter of last year Dell overtook Acer as the number 2 PC maker in the world. This year did not start well either: Acer's stock price has plummeted 22 percent since March 25 when the company slashed its first-quarter sales forecast.

Now the company is leaving cheap consumer notebooks and the quest for market share behind. It is focusing on profitability.

"There is good consensus among the board members that the tablet is the way to go," Chief Financial Officer Tu Che-min told Bloomberg.

It's no wonder tech companies would like to be like Apple with high margins and desirable products. According to Bloomberg, Apple had 21.5 percent profit margin last year. Acer had 2.3 percent. But it's not easy to transform a company from a mass producer of netbooks to high-margin brand. Acer knows that and that's why it is searching a new CEO who is a leading player in smartphones and tablets.

Going to tablets won't be an easy task. Apple dominates the market with iPad, and the competition is fierce. Motorola's Xoom, BlackBerry Playbook, the new Samsung Galaxy Tab and HP TouchPad are just some of the new devices trying to find their place in the market. Acer has its own Picasso tablet that uses Android operating system, but there in no information available on the release date or pricing.

Tags: Galaxy Tab, iPad, market share, pc, PlayBook, tablet

Companies: Acer, Apple, Dell, HP, HTC, Samsung

People: Gianfranco Lanci, Tu Che-min

By THE ASSOCIATED PRESS 02 Apr, 2011

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Source: http://feeds.nytimes.com/click.phdo?i=28ffe5c58297ee7ccd6c6a721abe56d9
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