It’s never pretty when a company goes through an existential crisis. Shares in Acer, the world’s third-largest maker of personal computers, have lost close to half their value this year, as management has dithered between chasing scale or profitability in the face of weak demand. Last week’s downgrade to second-quarter shipment forecasts – a mere two weeks after the new executive team hinted at an upgrade – suggests that the company still lacks a sense of direction.

Removing chief executive Gianfranco Lanci, an aficionado for growth, was supposed to provide a fresh start. Yet the installation of less aggressive chairman JT Wang as interim chief, effective April 1, may not improve much beyond the management of inventories. Acer’s immediate problem is that demand is still soft in Europe, by far its biggest market, accounting for just over half of revenues. The more fundamental problem is that the core notebook and netbook business – almost three-quarters of sales – is being cannibalised by tablets.

The bull case for Acer says that tablets are an expensive fad, and that demand for productivity-enhancing machines with old-fashioned data creation capability will come roaring back. The bear case, however, is that consumers are quite happy with the limitations of their dumb-but-pretty gizmos. What is discouraging for Acer investors is that not even management buys the bull case. Having toyed with tablet/PC hybrids with optional docking keyboards, it is now pushing the iPad-like Iconia A500, with onscreen keyboard. Last week the company unveiled a new organisational structure, declaring tablet and smartphone devices the “new … growth engine for the future.”