Dbtel's rise and fall show that integrity counts a lot

The company had planned to raise NT$3.8 billion to finance the construction of its headquarters in the Dingpu High-tech Industrial Park (頂埔高科技園區) in Taipei County. However, the share sale was aborted.

"We are conservative about doing financial forecasts," company chairman Mou said in a press conference on Sept. 30, in an attempt to convince the public of his innocence in the abnormal trading debacle.

Mou and his wife Kuo Pei-chih (郭佩芝), also Dbtel's president, are under investigation for allegedly trading Dbtel shares with insider information. They have been restricted from leaving the country.

`Too fast'

"We expanded too fast to develop the ability to cope with the industry's dramatic ups-and-downs," Mou told reporters.

Dbtel missed the financial forecast primarily because of faster-than-expected handset-price declines and its inability to put new products on the market, as well as an inability to manage channel inventories, Mou said in a letter to the public published in a local Chinese-language newspaper on Friday.

"Some Chinese cellphone brands exited the market for those reasons," Mou said.

However, he did not give a clear explanation of the trading of Dbtel shares through six investment companies he personally headed.

The company's Chinese unit, which used to be seen as a cash cow, now became a heavy burden for Dbtel. In the first half of this year, Dbtel's losses expanded to NT$2.4 billion -- NT$2 billion of this originating from its Chinese unit in Shanghai.

Though competition is intensifying, Dbtel said it is striving to return its Chinese unit to profitability via a restructuring plan. Dbtel now has 700 engineers in its research and development division in Shanghai.

"This is not the first time we have encountered serious operational difficulties. We hope the public will give us a chance to bring the 26-year-old Dbtel back to the level of its former glory days," Mou said.