BenQ's profits up threefold

BenQ Corp (明基電通), one of Taiwan's top contract makers of mobile phones, LCD monitors and digital cameras, reported slightly better than expected earnings yesterday as profits more than tripled compared to the same time last year.

The company also said that it expected profits in the third quarter to be just slightly lower than the second.

Slower sales this quarter have brought pressure to lower prices, but volume will remain intact, officials said. Sales of LCD monitors will rise month to month through the fourth quarter when "demand will be pretty strong," the company said in a statement.

BenQ reported net profits of NT$2.41 billion (US$70.8 million) on sales of NT$26.65 billion (US$783.8 million) for the quarter ended June 30. Both figures were higher than that of analysts surveyed by Bloomberg News, which had forecast profits of NT$2.33 billion on sales of NT$22.6 billion.

"BenQ will be in a strong position when the computer recovery comes," said Alex Wu (吳興國), electronics analyst at KGI Securities Corp (中信證券) in Taipei.

Executives said PC shipments are likely to take off again next month. Nevertheless, margins in the third quarter may fall, hurting profits, they said.

All eyes on intel

"Intel plans to lower chip prices in September to spur PC demand," BenQ Chairman Lee Kun-yao (李焜耀) said. "Everybody's waiting for prices to drop."

New mobile-phone models will hit production lines next month in preparation for the coming holiday season.

"Mobile-phone revenues in the third quarter should be roughly the same as in the second," said Joseph Hung, head of BenQ's mobile-phone division. "In the fourth quarter, sales will rise again."

The only bright spot BenQ sees for the coming months is increasing shipments of LCD monitors. After hitting a low in July, sales for the company increased this month. "Each month will be better and better," Lee said.

Consumers are gradually replacing their CRT monitors with sleek LCD screens. In the first half of the year, BenQ sold 2 million CRT monitors and 1.2 million LCD displays. During the second half of the year, LCD displays will overtake CRT, Lee Hsi-hua (李錫華), BenQ's deputy chief operating officer, said.

Among the products hardest hit by a drop in demand for electronics products has been CD-recordable machines, which allow consumers to make their own CDs. The company said that retail prices have plummeted because of a glut in the market.