Acer flooding the channel brings turmoil to PC market

Acer’s excess inventory has caused turmoil in the channel, but competitors should wait and see before making rash moves.

Thatt recommendation from a UK distributor comes as the company said last week that its board of directors had agreed to provide the channel with $150 million in sales allowance to clear inventory and disputed accounts receivable in the EMEA operations regions.

The distributor told TechEye: “It’s no secret that Acer has a lot of excess stock and this was flooding the market.  By supplying the market, and distributors like us, with excessive stock they have been putting other manufacturers under pressure in the pricing category  but also shooting itself in the foot. Its over supply means that it now has millions of pounds worth of excess stock that no one wants.

“Now it looks like it wants to cause trouble for the rest of the market as it seems that the company is moving to clear its old stock, which I think will really mess up the channel.

“By trying to buy its way out of excess inventory trouble the company  will create a domino effect on competitors whose products are sold in the same stores as Acer products and this could create turmoil in the market.”

He added that in a positive world the company could swing its profits the right way after dumping all its excess stock and by next year could return to the right track.  

“Most of Acer’s competitors are expected to take a wait and see attitude over the situation, Asustek should also keep this in mind as I don’t believe it will affect the company unless the dumping includes the latest Sandy Bridge-based products,” he added.

Acer said that the disputes were mainly as a result of “high inventory” carried by distributors of its products, reflecting an “inappropriate strategy” in its European operations under the current market situation.

It added that its investigation also found areas for vast improvement on managing channel inventory and accounts receivable, making Acer liable for loss, before adding that it believed that it would be back on a positive track soon.

It’s not just stock Acer is dumping. On Friday it also announced that it would be booting out around 300 employees as it tried to improve its share price.

It said that it hoped by lowering operating expenses the company could get itself back on financial track. Despite the sum of compensation to these wronged employees totalling to an estimated $30 million, the company said that it would cut operating expenses annually by $30 million.