Mon, Aug 07, 2006 - Page 12 News List

BenQ Mobile asks managers to accept salary cuts

STAFF WRITER

After announcing last month that it would cut 9 percent of staff, BenQ Mobile, headquartered in Munich, Germany, has asked upper level managers to accept one-third cuts in their salaries or quit, according to a German newspaper report.

Parent company BenQ Corp (明基), Taiwan's top maker of mobile phones, hopes to reduce its staff in Germany by about 25 percent, the Frankfurter Allgemeine Zeitung reported yesterday, citing anonymous sources.

BenQ took over Siemens AG's loss-making handset unit last year to form BenQ Mobile, which began operations last October.

Employees of BenQ's handset manufacturing factory in Germany have been guaranteed jobs until the end of the year, when BenQ plans to shut the plant because production is only at half of capacity, the daily said, citing a BenQ Mobile employee.

BenQ Mobile has 7,000 employees around the globe with 3,300 in Germany. This would translate into about 825 staff potentially being laid off.

To turn the firm around, BenQ Mobile's chief executive officer Clemens Joos plans to cut costs by 500 million euros (US$644 million) by the end of the year, the report said.

One female financial manager was dismissed because she was not strict enough in executing the cost-cutting plan, according to the report.

When the company announced the plan to cut jobs in Germany last month, company spokesman Eric Yu (游克用) said the layoffs were part of BenQ's ongoing restructuring to enhance competitiveness, and added that the move would not affect the firm's overall operations.

BenQ's sales increased 30.54 percent to NT$69.76 billion (US$2.12 billion) for the first half of the year, but it reported losses because of the acquisition of Siemens' handset division.

Deutsche Bank Securities estimated last month that BenQ would report an after-tax loss of NT$3 billion for the second quarter, and lowered its target price for the company to NT$36 from NT$42.

Shares of BenQ dropped NT$0.25 to close at NT$17.85 on the Taiwan Stock Exchange last Friday.

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