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March 27, 2017

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Acer approves NT$6.34 bil. impairment charge

TAIPEI, Taiwan -- Taiwan-based PC brand Acer Inc. on Tuesday said its board of directors agreed at a special meeting to recognize an impairment charge of approximately NT$6.34 billion, mainly that of intangible assets of its new cloud-related business.

Asked whether Acer's stock price would drop on recognizing the impairment loss, CEO Jason Chen said the impairment charge — the third in the company's history — would not affect company operations or its cash position because "Acer still has a NT$36 billion capital surplus that is enough for paying cash dividends."

Once completed, the impact on earnings per share (EPS) is estimated to be NT$2.06, with net value per share of approximately NT$19. The move is also expected to reduce amortization expenses by approximately NT$230 million in 2017.

Acer's board of directors also announced a contingency share buyback plan in case of abnormal stock price fluctuations, taking into consideration the interests of shareholders. The plan would target 100,000,000 shares at an estimated purchase price per share ranging from NT$10 to NT$19.

Cloud-related Business Unit

Chen said the write-off would lessen the burden of the company's new cloud-related business unit, which would be operated as an independent cash generating unit.

"We hope the group's (the cloud-related business arm) working environment would resemble that of a startup, one that encourages internal enterprising. And the nature of the new business requires an incentive scheme and assessment standard different from the wider corporation," Chen said.

The executive said the latest impairment charge would allow the cloud-related business to expand, expressing his hopes that the new unit would turn a profit as soon as possible.

Acer attributed the total impairment charge to the cloud-related business's intangible assets of approximately NT$6.19 billion and around NT$150 million of those relating to Gateway and Packard Bell's trademark value.

The intangible assets of the cloud-related business unit mainly resulted from its acquisition of iGware in 2012, the firm said. The latest write-off brings iGware's asset value down to 0.

"This is definitely the right thing to do," Chen said. "Acer has already integrated iGware's technology and the move will prove beneficial in the long run."

Chen also said that, upon requests from shareholders, management intended to put in place a consistent cash dividend policy, but that full implementation of the scheme required approval from the board of directors and the shareholders meeting.

Acer's cash position at the end of the third quarter this year amounts to NT$36.6 billion.

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