Acer to spend 2011 in the red after miserable Q2

Sales slump by a third and quarterly losses reach £150m for embattled PC maker

After posting a nine-figure loss during 2011's second quarter, Acer's chairman has admitted his firm will be unable to break even this year.

During Q2 the Taiwanese vendor's sales plummeted by about a third year on year to NT$102.2bn (£2.1bn), while operating losses stood at NT$7.1bn. The losses can be attributed in part to a $150m fund set aside to help clear the EMEA channel of excess stock.

Acer expects gross margin to improve next quarter, and again in Q4. The manufacturer is also expecting to see sales growth during Q3. But, according to reports, chairman JT Wang has indicated that his firm will find it "impossible" to post a profit this year.

In a statement, the vendor explained that its new business model is moving from keeping tabs only on product sell-in figures, to watching retail sell-out numbers as well. This will help it keep a tighter rein on inventory levels, claimed Acer.

"In Q2 Acer made efforts to further downsize channel inventory due to stagnant European and US economies, and the slow PC market," added the statement. "Additionally, the company paid considerably in senior executive severance pay. Consequently, Acer suffered higher than expected loss in Q2."

The vendor has endured a battering in the PC market share stakes this year and relinquished its position as EMEA's leading vendor during a tough Q1, according to Gartner statistics. The following quarter, it fell from number two to number four in the worldwide rankings, with the research house claiming its low-price, high-volume model is "no longer effective".

This year has also seen the release of Acer's Iconia tablet PC and early demand among channel firms appeared healthy. During May, the first full month after the device's release, sales through distributors across western Europe stood at 20,000, which analyst Context characterised as "pretty healthy numbers".