BenQ reports dive in earnings for third quarter

BenQ Corp (明基), Taiwan's biggest mobile-phone brand, yesterday posted disappointing quarterly results, but said it would return to profitability in the current quarter due primarily to strong seasonal demand for computer monitors.

During the July-September period, BenQ said earnings plunged to NT$20 million (US$594,000) from NT$1.37 billion a year ago. Earnings per share also slid to NT$0.01 from NT$0.59. Without a boost from non-operating income -- mostly from AU Optronics Corp (友達光電) -- BenQ posted its second straight quarterly loss, of NT$300 million, for the three-month period that ended last month.

Sales also dropped 15 percent to NT$34.09 billion from NT$40.33 billion a year earlier, according to the company's statistics.

"We saw an upswing in September after the tough second and third quarters. And we expect the growth momentum to extend into the fourth quarter," BenQ president Sheaffer Lee (李錫華) told investors yesterday.

Growth in liquid-crystal-display (LCD) computer monitors will provide the main boost for BenQ on solid Christmas shopping demand, Lee said, adding that demand for consumer electronics products such as LCD TVs would bolster performance.

Computers and related products accounted for 83 percent of BenQ's sales in the third quarter, according to a company statement.

"Visibility [for the current quarter] is very high," chief financial executive Eric Yu (游克用) said.

"We expect BenQ to return to black in the fourth quarter in terms of operating income," Yu told reporters.

The forecast does not include new handset unit BenQ Mobile, which the company took over from Siemens AG in June, with a 250 million euro (US$303 million) subsidy from the Germany cellphone giant.

After the acquisition from Siemens AG, mobile phones will contribute the biggest portion of sales, or about half, Yu said.

BenQ Mobile aims to break even by the end of next year with cost savings of 500 million euros for the whole year, said Clemens Joos, chief executive of BenQ Mobile, who attended the company's investors conference for the first time yesterday.

In addition, the company hopes to expand its market share to 10 percent within the next two to three years from the current 5 percent, Joos said.

Giving his outlook for the current quarter, BenQ executive Jerry Wang (王文燦) said that "order intake [for branded handsets] has greatly exceeded our previous estimates, as demand is rebounding strongly, mostly from the US and Europe."

BenQ plans to launch the first BenQ-Siemens co-branded phone next spring, Joos said.

Wang yesterday also assured investors that the integration was going more smoothly than expected. Wang declined to detail BenQ's product roadmap for next year.

"I believe they will first target low-priced mobile phones because BenQ, which used to make phones for Motorola Inc, is good at making profits using economic scale," said Tina Huang (黃玉枝), an analyst with SinoPac Securities Corp (建華證券).

Huang said she suggested that investors stay on the sidelines for the time being because of uncertainties about the integration of BenQ and Siemens' former mobile unit.