Sat, Apr 22, 2006 - Page 12 News List

BenQ shares jump on unexpected first-quarter news

By Lisa Wang  /  STAFF REPORTER

Shares in the nation's top mobile phone maker BenQ Corp (明基) jumped almost 2 percent after the company said losses for the first quarter would be less than the previous quarter.

BenQ made the comments in a statement released late on Thursday night amid speculation about spiraling quarterly losses in the wake of its acquisition of Siemens AG's ailing handset division last year.

"We expect first-quarter operations will improve. The results will match our forecast made during the fourth-quarter," the company's chief financial officer Eric Yu (游克用) said in a statement filed to the Taiwan Stock Exchange.

The clarification boosted the company's shares by NT$0.45, or 1.68 percent, to close at NT$27.25 on the Taiwan Stock Exchange yesterday, compared to the benchmark TAIEX index's 0.14 percent drop.

In the final quarter of last year, BenQ posted quarterly losses of NT$6.02 billion (US$186.4 million). Without factoring in the NT$3 billion income generated by its affiliate AU Optronics Corp (友達光電), the company had operating losses of NT$9.06 billion.

BenQ holds about a 13 percent stake in AU Optronics, which owns 5 percent of the mobile phone vendor.

AU Optronics said on Thursday that NT$300 million out of NT$679 million in non-operating losses for the first quarter resulted from losses of its affiliates.

BenQ and Wellypower Optronics Corp (威力盟), a maker of lamps used in liquid-crystal-display (LCD) panels, are two of AU Optronic's major affiliates.

AU Optronics' financial statement caused speculation that BenQ could report wider losses of more than NT$6 billion for the first three months of the year. BenQ is scheduled to release its financial results on Monday.

A Chinese-language newspaper reported that BenQ's first-quarter loss won't exceed NT$6 billion, citing Yu. But analysts weren't so optimistic.

Vincent Chen (陳豊丰), analyst with CLSA Ltd's Taipei branch, projected losses for the first quarter would rise to NT$6.66 billion, from the fourth quarter of last year. Operating losses would expand at a faster pace to NT$9.74 billion, he forecast.

"We don't expect BenQ to narrow its losses significantly until the second quarter," said Daniel Wang (王德善), an analyst with Primasia Securities in Taipei.

Wang expected BenQ to post flat net losses for the first three months, compared to last quarter. The company may make progress in cost saving in the current quarter by purchasing components at lower prices after renewing contracts with suppliers, he said.

BenQ aims to break even by the end of this year primarily by increasing cost efficiency, but most analysts took a wait-and-see attitude about the company's goal.

CLSA's Chen predicted that BenQ would remain in the red for the whole year in terms of core operations.

He rated BenQ an “under-perform” with a 12-month target price of NT$25.5, which implied about a 7-percent slide from the stock's closing price of NT$27.25 yesterday.

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