For the first time in its company history, Number Two PC maker Acer (News - Alert) Inc. out of Taiwan reported a quarterly loss and said it will be impossible for the company to break even for the full year. The company is attempting to reorganize after a troubled first half of the year.

Acer, which has been a force in the PC and low-cost notebook computing segments, has failed to compete against the success of tablets like Apple's (News - Alert) iPad, which have cut into PC sales and damaged profits. The company has attempted to refocus on mobile devices to boost growth after a disappointing first half in which CEO Gianfranco Lanci left abruptly in April amidst conflict over the company's strategy.

A sharp cut in the company's revenue outlook during the first quarter also triggered an 18 percent fall in its shares over a period of four days. A series of cuts to Acer's shipment forecasts also contributed to the disappointing first half performance. Ahead of the earnings announcement, shares in the company closed down 2.92 percent today. Shares have fallen 65 percent this year with the overall market down 16.4 percent. The company's rival Asustek has gained 6.8 percent.

“Today I have to say, trying to break even this year becomes impossible,” said J.T. Wang, Acer chairman, at an investor conference. He cited a worsening macro environment in Europe and the need for “more time and effort” for the restructuring as contributing factors and added that the second quarter of this year was a “correction” period and that its loss was worse than expected since the company cleared up excessive inventory and also made severance payments for resignations among senior management. Wang did not say how much former CEO Lanci received.

Wang said he expects the third quarter will be better for the company, although it will still see a loss. Last month he had predicted the company would report a second quarter loss but return to profit in the third quarter and post a small full-year profit. In June the company reported it would take a $150 million charge to write off inventory and doubtful payments in Europe, and announced it would cut 300 jobs there.

Andrew Chang, a Macquarie analyst, said Acer has no new competitive products to launch in the third quarter, and he expects flat revenue growth from the previous quarter, along with a 29 percent drop from a year ago. He added that a turnaround for the company could be possible next year if it normalizes sales in Europe, boosts shares in China's corporate PC market, launches new products at a quicker rate and gets on board when Microsoft launches Windows 8 next October.

U.S. rival Hewlett-Packard (News - Alert) Co.'s plan to spin off its personal computer business could serve to help Acer, according to HSBC analyst Jenny Lai. “Acer should benefit from HP's share the most in Europe because it's the second biggest in consumer space in the region,” she said.

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