Swiss brokerage house UBS Securities cut its target price on computer vendor Acer Inc’s (宏碁) shares late on Tuesday after the company announced it would take a NT$3.5 billion (US$120 million) write-down on the value of its trademark rights.
UBS trimmed its target price for Acer from NT$19 to NT$18 and maintained its “sell” rating on the stock, while also lowering its estimate of Acer’s earnings per share for last year from NT$0.07 to a loss per share of NT$0.94.
“We are skeptical about the assumptions behind the impairment test, given the write-down does not include anything from goodwill,” UBS chief electronics hardware analyst Arthur Hsieh (謝宗文) said in a note to clients. “With Acer’s declining market position, the acquired entities, including Packard Bell, Gateway, eMachines and E-TEN (倚天), clearly did not generate the expected cash flow that Acer had originally projected when it made all those acquisitions.”
Hsieh added that there is limited room for Acer to cut operating expenses given that it is already one of the most tightly run companies in the industry.
As a result, he believes Acer’s thin profit margin could easily “turn red” should its competitors price their products more aggressively.
Acer shares closed down 0.61 percent at NT$24.55 in Taipei trading yesterday.
Acer said on Tuesday that the NT$3.5 billion (US$120.7 million) intangible asset impairment charge was for losses in the value of rights to four trademarks –– Gateway (NT$2.4 billion), Packard Bell (NT$398 million), eMachines (NT$432 million) and E-TEN (NT$298 million).
The loss, which will be reflected in last year’s annual report, accounted for 8 percent of Acer’s total intangible assets as of the fourth quarter of last year, the company said in a statement.
Japanese brokerage house Nomura Holdings Inc maintained its “reduce” rating and its target price of NT$19 on Acer, saying the NT$1.3 per share loss in book value represented by the one-time charge was much smaller than the NT$2 to NT$3 range it had expected.
“Longer term, we think Acer still needs to face the reality of how to rebuild the brand positioning/image for Packard Bell and Gateway amid intense competition and slowing PC industry growth,” Nomura analyst Eve Jung (戎宜蘋) said.
It is still too early to turn positive on Acer before the company delivers more concrete evidence of market-share gains and margin improvements, and a new strategy for cost reduction and restructuring, she said.
Bank of America Merrill Lynch maintained its “underperform” rating and its target price of NT$24 for Acer, adding that the company has already missed a window for winning back market share as the overall PC market would see an annual decline this year.
The bank believed that Acer is still searching for a viable business model in the “post-PC era” and has yet to show signs of a recovery in its fortunes.
Germany’s Deutsche Bank AG maintained a “hold” rating on Acer and its target price of NT$24.
It believes the company’s fourth-quarter earnings may miss market expectations due to the asset impairment losses and Acer’s weaker PC momentum.
The bank also forecast that Acer’s sales this quarter would decline 6 percent from the previous quarter to NT$99 billion, compared with a market consensus of NT$102 billion.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary