BenQ profits slip as SARS crimps demand in China

BenQ Corp (明基電通), the nation's largest mobile-phone maker, said second-quarter profit fell 40 percent because the SARS outbreak crimped demand in China, the world's second-largest handset market.

Net income for the three months ended June 30 slid to NT$1.45 billion (US$42 million) from NT$2.4 billion a year earlier. Sales rose to NT$23 billion from NT$22.6 billion.

Taipei-based BenQ, which also makes flat-panel monitors for personal computers, said it expects sales to rise as much as 30 percent this quarter from the second, on demand for liquid-crystal display screens and optical drives.

The company, whose customers include Motorola Inc, said it expects handset sales momentum to recover in the fourth quarter.

BenQ earns its best profits from handsets, some of which went unsold in China after customers stayed at home to avoid SARS.

The company is keeping its target to sell about 15 million cellphones this year after shipping more than 6 million in the first half, chairman Lee Kun-yao (李焜耀) said on July 2.

Handset sales in China account for one-fifth of BenQ's sales.

Motorola, the world's No. 2 mobile-phone maker, on June 9 cut its sales and profit forecasts for the year because of SARS and excess inventory.

Inventories in China started rising prior to SARS as overseas and domestic suppliers tried to boost sales. Oversupply has since fallen from as much as five months of inventory to about one, Lee said last month.

BenQ shares fell NT$0.7, or 1.4 percent, to close at NT$49 on the TAIEX yesterday. The shares have gained 51 percent this year, against a 24 percent rise in the benchmark index.