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Taiwanese focus risks Acer's future: former CEO

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CIOL Bureau
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HELSINKI, FINLAND: Acer Inc's increasing concentration of its decision-making, product development and operations in homeland Taiwan could badly hurt the world's No 2 PC maker, warned long-time executive Gianfranco Lanci, who left the firm abruptly at the end of March.

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Acer said at the time the surprise departure of Lanci, an Italian and a 14-year veteran of the firm, was due to differences over the strategy needed to counter the runaway success of the tablet market, which has cannibalised Acer's profits.

Lanci told Reuters in a telephone interview from Italy that he left because some members of the board, including chairman JT Wang, were looking to focus more on operating from Taiwan at a time when he believed the company had to look abroad to succeed.

"I did not want to stay there and manage a disaster," Lanci said. "If they stay with Taiwan logic, they will drop out of the top three."

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"They have already started to bring (operations) back to Taiwan, but they cannot succeed without becoming more global. To close everything into Taiwan is not going to be a winning strategy."

While Taiwan offers strong hardware skills, the availability of software engineers is limited. Lanci suggested Acer invest more in software and software integration services overseas as the PC industry moves away from the near monopoly of Microsoft and Intel.

Acer dismissed Lanci's comments on "Taiwanisation" and said globalisation has always been, and will continue to be, Acer's long-term direction.

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"The idea of pushing for 'Taiwan focus or Taiwanisation' is simply untrue," Acer's Chairman and current CEO Wang said in comments emailed to Reuters.

He added that the key responsibility of Acer's leader is to ensure healthy company operations for a sustainable future and must have long-term vision, "regardless of his nationality".

"The former CEO had deviated from the right track and hurt company's business foundation," Wang said, noting that Acer's smartphone development in the past three years had been unsatisfactory and PC inventory levels were unhealthy.

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A brain surgery

In an investor conference late last month, Wang had described the management change as "brain surgery", needed because "the problem in the brain has led to a malfunctioning of the upper body". Lanci called that comment "low and not professional"

Shares of Acer, one of Taiwan's best-known brands, have fallen more than a quarter since the company announced on March 25 that its first-quarter sales would be worse than expected and second quarter sales would be flat, triggering a wave of analyst downgrades.

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Last month, Acer warned its revenue in the second quarter would fall some 10 per cent from the first, but noted that the PC market had bottomed out and demand in Europe was set to bounce back. It posted a worse-than-expected 64 per cent fall in audited first-quarter net profit.

Lanci was credited with helping Acer make it to the world's No.2 spot through a focus on low-cost laptops and notebooks, the segment worst hit by success of Apple's iPad.

Citi has called Acer "the biggest victim of the tablet cannibalisation of the consumer notebook".

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Lanci unveiled the first Acer tablet 12 months ago but they have only now reached stores.

"Why we were late - we were trying to do everything in Taiwan," he said.

Acer, which is targeting tablet sales of around 6 million this year, said the company has already started shipping tablets and is second to Motorola in the shipment of Android 3.0 platform tablets.

Lanci joined Acer in 1997 after it took over the notebook division of Texas Instruments, for whom Lanci worked at the time. He became CEO in 2008.

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