Thu, May 04, 2006 - Page 12 News List

BenQ to sell R&D center to rival Motorola

By Lisa Wang  /  STAFF REPORTER

BenQ Corp (明基), the world's No. 6 mobile phone vendor, yesterday said it would sell a research and development center in Denmark to rival Motorola Inc as part of its efforts to turn around losses in the wake of acquiring Siemens AG's mobile division.

The Taipei-based mobile phone maker has signed an agreement to sell a research center in Aalborg, Denmark to the world's second-largest mobile phone brand, according to a joint statement released yesterday.

"With the sale of the R&D site in Aalborg, Denmark, we found an ideal solution for the employees and made another important step toward being in the black by the end of the year," said Clemens Joos, chief executive officer of BenQ Mobile.

As part of the transaction, Motorola will acquire approximately 250 employees, the statement said. The deal is expected to be closed in early June, it said, without disclosing the terms.

The company is sticking by its goal of breaking even by the year end, Joos said.

BenQ posted operating losses of NT$17.39 billion (US$549.9 million) for the past two quarters after taking over Siemens AG's mobile unit in October. Since then, BenQ said it has saved 150 million euros (US$190 million) in costs with a large part from the closure of a research and development center in Ulm of Germany.

"Apparently there is some cost savings for BenQ [by selling the Denmark research center]," said Vincent Chen (陳豊丰), an analyst with CLSA Ltd's Taipei branch.

The Denmark research center costs BenQ about 15 million euros a year, Chen estimated.

After the sale, BenQ will have only three research centers in Europe -- two in Munich and Kamp Lintfort, Germany and one in Wroclav, Poland.

High Tech Computer Corp (宏達電), the world's biggest maker of mobile phones using Microsoft Corp's operating system, was also in the bidding for BenQ's Danish research center but failed to get it, according to Chen.

BenQ is trying to improve its operations and to increase cash flow by selling assets. In the middle of last month, BenQ announced that it would sell a non-core optical disk drive unit to local rival Lite-On Technology Corp (建興電子) for about NT$6.2 billion in cash and stock.

Although BenQ will continue to post operating losses in the next seven quarters, "we tend to believe the worst for BenQ is behind us," Chen said.

BenQ shares have declined about 11.5 percent since it announced the takeover of Siemens' mobile division last June.

The shares closed at NT$28.4 yesterday on the Taiwan Stock Exchange.

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