Wed, Oct 04, 2006 - Page 11 News List

BenQ estimates a loss of US$1.1 billion on phones

GLOOMY NEWS BenQ, the world's No. 6 mobile phone vendor, filed for insolvency last week for the German operations it took over from Siemens AG last October

AGENCIES , TAIPEI AND KIEL, GERMANY

BenQ Corp (明基), which took over Siemens AG's unprofitable mobile-phone business a year ago, estimates it lost at least 840 million euros (US$1.1 billion) in the handset business on delays in new models.

The loss in the 12 months until Sept. 30 includes the company's own-branded business and its contract-manufacturing operations, Rick Lei (雷輝), a BenQ vice president in charge of business strategy, said in a conference call from Taipei yesterday.

There were two reasons for the delays, Lei said. First, Munich-based BenQ Mobile GmbH & Co sold custom-made phones for operators, so the customization and modification process took time.

But the more important factor was poor product management at the German unit, he said.

"The unit's management team didn't make enough effort to integrate their project, customer, supply chain operations," Lei said.

The loss was "unbearable" for BenQ, which has registered capital of NT$26.2 billion (US$794 million), Lei said.

If BenQ were to continue to keep the German unit, it would have to inject 800 million euros into the unit in the coming year, he said.

BenQ, the world's No. 6 mobile phone vendor by market share, filed for insolvency last week for the German operations it took over from Siemens AG last October, endangering 3,000 jobs.

Taiwan's biggest mobile-phone maker said it can still use the Siemens brand for four more years under the sale agreement.

BenQ expects Siemens to honor an agreement to pay an outstanding amount of at least 150 million euros from the deal, said Eric Yu (游克用), who declined to give a breakdown of how much would go to BenQ and how much the German unit would receive.

Siemens, which faces criticism from workers, unions and politicians over BenQ's decision, and said on Friday it may take legal steps against the Taiwanese company.

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