BenQ may report fourth-quarter loss

BenQ Corp (明基), Taiwan's biggest cellphone maker, may post a fourth-quarter loss after completing the takeover of Siemens AG's unprofitable handset unit.

The net loss will probably be NT$1.75 billion (US$53.85 million), or NT$0.89 a share, compared with a NT$200 million profit, or NT$0.09 a share, a year earlier, according to the median forecast of five analysts surveyed.

The Taipei-based company is scheduled to report earnings tomorrow after the 1:30pm stock market close.

Chairman Lee Kun-yao (李焜耀), 53, is counting on the Siemens unit to turn BenQ into a globally recognized mobile-phone brand that can compete with market-leader Nokia Oyj and Motorola Inc.

Siemens sold the handset unit after its market share fell to about 5 percent at the end of last year from 8 percent in the three months ended March 31, 2004, analysts said.

"The fourth-quarter loss was mainly due to restructuring costs and marketing expenses to promote the BenQ-Siemens brand," said Vincent Chen (陳豊丰), an analyst at CLSA Taiwan, which has an "outperform" recommendation on BenQ's stock.

"The takeover of Siemens' unit helped revive BenQ's handset business after it lost its major client Motorola in 2005," he said.

The acquisition boosted BenQ's ranking to number six among the world's cellphone manufacturers. The company shipped about 10.5 million mobile phones in the fourth quarter, the first three-month period that has included sales of Siemens handsets, according to analysts' estimates. A year earlier BenQ shipped 2.9 million units.

Sales rose 65 percent to NT$66.3 billion, according to figures released earlier. More than 60 percent of the company's revenue comes from handsets, president Sheaffer Lee (李錫華) said on Jan. 20.

Shares in BenQ rose 10 percent in the fourth quarter, compared with a 7 percent gain for the benchmark TAIEX.

The company's handset shipments declined to between 900,000 and 1 million units in each of the previous three quarters of last year after it lost Motorola's business, according to the company's figures.

"The mobile-phone business stands a good chance of meeting the company's target of achieving break-even by the end of this year as it is positioning itself to offer more advanced models that have higher margins," Chen said.

BenQ introduced its co-branded products to the world earlier this year.

On Jan. 17, it released three BenQ-Siemens handsets at press conferences in Berlin and Beijing.