Thu, Mar 04, 2004 - Page 11 News List

Strong Q1 to set 2004 growth: BenQ

FORECAST The company's president's prediction is based a strong demand for mobile phones and a possible surge LCD TVs and projectors later this year

By Lisa Wang  /  STAFF REPORTER

BenQ Corp (明基電通), the nation's biggest mobile-phone maker, expects a solid first quarter to herald a high-growth year due to strong demand for consumer-oriented electronics and higher non-operating gain, an official said yesterday.

First quarter revenue is expected to rise about 10 percent from the previous quarter, which will also represent a 50 percent growth year-on-year, BenQ president Sheaffer Lee (李錫華) said at an investor conference in Taipei.

"The first quarter looks very promising and the momentum will extend to the second quarter," Lee said.

Based on that forecast, BenQ is expected to report NT$40.51 billion (US$1.2 billion) in revenue during the first quarter. The handset maker earned NT$2.36 billion, or NT$1.14 a share, on revenues of NT$36.83 billion during the fourth quarter.

Lee based his growth prediction on strong demand for mobile phones in the slack first quarter along with a possible surge in shipment of liquid-crystal-display (LCD) TVs and projectors later this year.

Eric Yu (游克用), BenQ's chief financial officer, expects its earnings to grow faster this year than last.

BenQ's net income last year inched up just 1 percent from the previous year, thanks to a huge NT$7.5 billion in non-operating

income.

Shares of BenQ yesterday rose 1.7 percent to close at NT$47.90 on the TAIEX, before the company made the forecast.

During the conference, investors speculated that the partnership between BenQ and its biggest handset client, Motorola Inc, has soured.

Lee didn't directly responded to such investors' concerns yesterday.

But he seems optimistic about the company's mobile-phone division by predicting that this year's shipment and production value will be higher than last year's.

BenQ shipped about 13 million mobile phones last year.

In the first quarter, the shipment will exceed 4 million and the second quarter should be even better than that, but tight supply of key components could cap the shipment, Lee said.

His bullish prospects for handset segment did impress some investors.

"The forecast shows that BenQ still has a stable relationship with Motorola, which was totally unexpected," said Chou Chi-shian (周奇賢), an analyst with SinoPac Securities Corp (建華證券).

Chou raised his earnings projection for BenQ to NT$5.6 per share from NT$4.5 on the rosy outlook.

But the analyst holds a neutral view about BenQ's latest joint venture with Chinese mobile-phone maker CEC Telecom Technology Co (CECT, 中電通信).

BenQ hopes to sell its brand-name handsets in China using CECT's licenses. In the new Chinese affiliate, BenQ holds a 51-percent stake, while CECT holds 49 percent.

Steven Chao (趙迦驊), an associate director of UBS Global Asset Management (Taiwan) Ltd forecast that BenQ will earn NT$5 a share, but with bulk of the profits coming from its non-operating gains particularly from AU Optronics Corp (友達光電).

"I don't have high hopes about its core business. It's just not an easy job to run a brand," Chao said.

He expects non-operating income will contribute about NT$3 to the company's earnings this year.

Both Chao and Chou expect AU's profit contribution to increase this year.

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