Acer Suing Former CEO For Breach of Non-Compete

On Tuesday Acer said that it had initiated legal action against former CEO and President Gianfranco Lanci. The company claims that Lanci has breached the non-compete clause in his contract when he left the company in March 2011. Acer has initiated legal action in Italian courts, the company said.

Lanci stepped down from his position at Acer last year over disagreements around product strategy. After joining the company in 1997, he helped Acer expand its global presence, presiding over the acquisitions of both Packard Bell and Gateway. Thanks to his leadership, Acer at one point became the second biggest PC company in the world.

But as consumers began to shift to smartphones and tablets, the split between Lanci and Acer investors began to grow: Lanci wanted to push the company to become more mobile-focused and more global. Acer also needed to focus on software and hardware integration by expanding from 300 to 400 engineers to 1,000. This meant hiring talent that currently wasn't present in Taiwan.

But investors feared that this move would lead to a "de-Taiwanization" of the company. Lanci argued that it's just globalization. "If we want to be in the top three (PC makers) in the next three to five years, we need to be a global company and we need to leverage resources wherever they are," he said in an interview at the time.

The bickering between Lanci and the investors continued. Meanwhile, Acer was late in delivering on its smartphone and tablet vision. It misjudged the weakness in demand for products in Europe and the United States, thus leading to two consecutive quarters of missing earnings guidance. It also brought a $150M write down for excess (unsold) inventory in Europe.

Yet had Acer followed his vision, Lanci said the $20 billion business would have quickly grown to a $30 billion business, bringing in over a third of its sales from smartphones and tablets by 2015. "People after a few years will decide who was wrong," he said.

Seven months after leaving Acer, Lanci signed on with Lenovo as a consultant focusing on assisting the computer firm to build itself as a consumer brand. Shortly thereafter, he was appointed the head of Lenovo's Europe, Middle East and Africa businesses last month.

"Gianfranco brings years of expertise and insights to Lenovo that will help us strengthen our growing global consumer business," Lenovo CEO Yuanqing Yang said of Lanci’s new role last year. But apparently Lanci wasn't allowed to share that expertise and insight with Lenovo, as Acer states that there is a 12-month non-compete period in Lanci's agreement.

"We believe Mr. Lanci has clearly breached the terms of the non-compete agreement he entered into willingly," the company states. "We believe we have a very robust case."

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