A future for PCs? Acer’s Chen is betting company on it

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Jason Chen, Chief Executive Officer of Acer Inc., gestures whilst speaking during a news conference at the IFA Consumer Electronics Fair in Berlin, Germany, on Sept. 3, 2014. Jason Chen, Chief Executive Officer of Acer Inc., gestures whilst speaking during a news conference at the IFA Consumer Electronics Fair in Berlin, Germany, on Sept. 3, 2014.

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When Jason Chen took over as chief executive officer at Acer Inc. a year ago, he was handed a three-page, color-coded list of problems at the ailing PC maker. He shoved the memo in a drawer and never looked at it again.
Instead, the 53-year-old focused on the positive. Chen crafted a 100-day plan after reading books about turnarounds at International Business Machines Corp. and Japan Airlines Co.  He met with employees at Acer’s Taipei headquarters to share ideas and then headed overseas to bolster morale.
Defying predictions of a PC industry in decline as consumers shift to mobile devices, Acer is betting on next-generation models, including inexpensive laptops that run Google Inc.’s (GOOG) Chrome software and tablet-laptop hybrids, while expanding into phones and cloud computing. With the company’s shares rising 17 percent last year, Chen is declaring his turnaround complete and predicting a return to sales growth.
“Any and every company has a lot of problems,” Chen said during an interview at Acer’s headquarters. “I pay much more attention to what are the strengths of the company and how do we use the strengths to capture opportunity.”
Acer hasn’t seen much of Chen’s brand of optimism lately. In the three years before he came on, the company’s stock tumbled 80 percent as the PC market slid and profits evaporated. The company ultimately took $450 million in write-offs, and the previous management team resigned.
IBM, Intel

Visitors and members of the media visit the Acer Inc. booth at the Computex Taipei 2014 expo at the Taipei Nangang Exhibition Center in Taipei, Taiwan.
Chen has “delivered what’s needed to take the first step in turning around the company,” said Vincent Chen, at Yuanta Financial Holding Co., who rates Acer a hold. “He’s been successful in controlling the losses and turning to profit.”
Although Jason Chen was born in Taiwan, he’s traveled the world for his career. He worked at IBM, Intel Corp. (INTC) and most recently Taiwan Semiconductor Manufacturing Co. before joining Acer. A salesman by training, he emphasizes words such as “optimize” and “stabilize.”
Asked why he accepted the proposal from Acer founder Stan Shih to lead the company, Chen said it was the size of the undertaking that attracted him. “The key word was ‘challenge,’” he said in the Dec. 16 interview. “The highest-level challenge in business is turnaround.”
Having bled cash, market share and revenue during the past three years, Chen wants to take the former notebook-computer leader back to basics. He set up regular Monday morning meetings to model revenue expectations for the coming six months so he can decide how much to spend.
Chromebook business
Acer’s experience is in the “not-so-comfortable” business of making PCs, Chen said. Rather than shifting to completely new businesses, he wants to make steady improvements within PCs while expanding in related areas. By exploiting the core business, Chen said Acer would return to annual revenue growth this year for the first time in five years.
“The turnaround is pretty much done,” he said. This year, “we should no longer talk about turnaround.”
Acer sees its biggest chance in the nascent market for Chromebooks -- low-cost laptops that run Google’s operating system and eschew expensive internal storage drives. Acer has about 35 percent of the market, according to researcher International Data Corp., and figures growth in the category will lift its fortunes. The company announced what it said was the industry’s first 15.6-inch Chromebook Jan. 3 in Las Vegas.
Convertible notebooks
Chromebooks probably won’t be a “cure-all,” said Bryan Ma, a PC analyst at IDC in Singapore.
“It might help stabilize things to get them back up onto their feet in the short term,” he said. “Ultimately, the bigger question is how they plan to address product categories beyond the PC.”

Jason Chen, chief executive officer of Acer Inc., left, and Stan Shih, co-founder and chairman, react as they arrive for a news conference at the company's headquarters in New Taipei City, Taiwan, on Jan. 13, 2014.
Convertible notebooks -- with detachable keyboards that allow them to transform into tablets -- let Acer cater to those who’ve been dumping PCs for Apple Inc. iPads. Meanwhile, high-end models will help the company attract the gamer crowd that hasn’t yet given up on computers entirely.
Acer is also venturing into smartphones. From a small base, the company has tripled its sales during the past three years and plans to keep its focus tight, exploring different markets and strategies to find a successful formula.
That low-key, small-scale approach will allow Acer to ride out a wave of hyper-competition that’s likely to wipe out rivals, Chen said. It’ll also help the company stay alive long enough to realize Shih’s dream of building a cloud-computing ecosystem that Acer’s founder first conceived of a decade ago.
Cloud initiative
Relaunched last year under the Build Your Own Cloud tag, Acer’s vision is to let users host their own data at home using the company’s software and hardware platforms, avoiding the pitfalls that have seen bigger names fall victim to hacking and privacy breaches.
While Chen refused to grade his own first-year performance, investors and customers have already bought into the sales spiel. Acer’s stock price, market share and shipments have grown, and analysts are predicting its fourth-quarter revenue will show the first gain since June 2012.
“I am a strong believer that when you face the sun, and move as fast as you can toward the sun, the shadow will be behind us,” Chen said. “But if you keep looking at the shadow, it’ll grow longer because the sun sets.”

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