BenQ posts decline in Q1 earnings

BenQ Corp (明基電通), a leading computer electronics maker, yesterday said first-quarter earnings plunged to only one-tenth of their level a year ago, and blamed the loss of a major handset customer.

No significant recovery is in sight for the near-term, the company said.

During the January-March quarter, earnings slid to NT$300 million from NT$3.1 billion a year earlier. Non-operating income contributed the bulk of it, at NT$290 million, with operating income accounting for a mere NT$50 million.

Earnings per share dropped to NT$0.13 from NT$1.48 year-on-year. Revenue was NT$32.33 billion.

Losses from the high-margin mobile phone segment, previously BenQ's cash cow, were the key behind the company's disappointing quarterly result, chief financial executive Alex Liu (劉維宇) told reporters.

BenQ did not reveal the figure.

"We expect the first half [of this year] to be a flat period for BenQ as our new customers are cautiously increasing handset volumes," president Sheaffer Lee (李錫華) told investors.

BenQ supplies cellphones to Nokia Ojy, the world's top handset vendor, and a European mobile operator.

Analysts speculate the company lost Motorola Inc of the US as a major customer either late last year or early this year.

Given a lack of large orders from global mobile phone vendors and a lag in developing new models, BenQ does not expect losses from its handset operations to shrink in the near term, Liu said.

"Operating income should be flat in the second quarter, compared to last quarter," Liu said.

The contribution from the handset business fell to around 11 percent in the quarter ended March in terms of revenues, from 17 percent a year earlier, according to BenQ.

The company said it only shipped 1 million cellphones in the quarter.

Looking forward, Lee said second quarter revenues would be flat compared to first quarter, as lower prices for products such as flat-panel TVs would offset the stablized prices for liquid-crystal-display (LCD) computer monitors.

Lee blamed a 15 percent fall in LCD monitor prices for a 20 percent decline in revenue from the previous quarter.

The results were below some analysts' expectations.

"Operating income was disappointing. BenQ's profitability was weaker than we expected," said Vincent Chen (陳豊丰), an analyst with CLSA Ltd (里昂證券) in Taipei.

Chen expects BenQ to sustain its profit level in the current quarter as prices for LCD monitors are stabilizing.

LCD computers monitors accounted for more than half of the company's total sales.

Chen does not expect BenQ's performance to pick up over the next several quarters.