Acer cuts staff in Europe, takes $150 million charge

Moves are to cut costs and streamline operations

Acer is laying off 300 employees in Europe and taking a charge of US$150 million, as the company tries to streamline operations following the departure of CEO Gianfranco Lanci in March after a conflict with the company's management.

The layoffs aim to cut costs and to meet "the market change and to face challenges ahead," Acer said in a statement on Wednesday. The write-off came following a discovery of abnormalities in the company's distribution channel in Europe, Middle East and Africa, that was revealed through an investigation conducted after Lanci's departure, it added.

Acer has been hurt by the slower-than-expected growth in the PC market globally. Lanci's resignation came just under a week after Acer said revenue from PCs in the first quarter of fiscal 2011 would fall short of expectations due to weak demand in Western Europe and the U.S.

Acer's PC shipments have been declining in recent quarters, and Acer founder Stan Shih has publicly called for the company to change its focus from PCs to tablets and smartphones.

The one-time charge comes after audits of the EMEA (Europe, Middle East and Africa) channel revealed high inventory levels and disputed accounts receivable, including abnormalities in "the accounts receivable from channels in Spain," Acer said.

The audit also showed improvements that could be made in the channel. The company will propose action and take steps to improve operations, Acer said.

In order to cut costs further, the company is also recommending that employee bonuses for 2010 be cut by 40 percent. The board of directors have agreed to cut their own remuneration by 50 percent, Acer said.

Acer CEO J.T. Wang has also agreed to cut his remuneration for 2010, the company said.

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Agam Shah

IDG News Service
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