Sat, Oct 14, 2006 - Page 11 News List

BenQ denies plan to stop making its own handsets

BLOOMBERG

BenQ Corp (明基), which last month discontinued funding its unprofitable German mobile-phone unit acquired from Siemens AG a year ago, denied a news report that it may stop selling handsets under its own name.

BenQ may produce mobile phones for large-scale clients and stop own-branded sales, German newspaper Sueddeutsche Zeitung reported yesterday, citing unidentified people.

"The report is groundless and not true," Eric Yu (游克用), CFO of BenQ, Taiwan's biggest mobile-phone maker, said by telephone yesterday. "As said on Sept. 28, we will continue our own-branded mobile business in selected markets, namely Asia-Pacific, China and the Middle East."

Yu's comments may help ease concerns about the future of BenQ's cellphone business after the German unit filed for bankruptcy protection following the funding decision.

The Apple Daily reported yesterday that BenQ's German unit stopped shipments of the S68 mobile phone and put another two new models on hold, pending a court ruling on the insolvency protection.

"We need to negotiate with the German unit's insolvency administrator on shipments as there're changes in the transaction terms after the unit filed for insolvency protection," Yu said.

"Before that, we will use our inventory to fill orders," he said.

He declined to give details on the inventory level and phone models that would be affected.

The German unit supplied 20 percent to 30 percent of BenQ's mobile phone shipments.

Yu said BenQ makes most of its handsets in factories in Shanghai and Suzhou.

But in Germany, BenQ Mobile, which filed for insolvency protection last month, said it's in talks with customers and investors about a new business model to continue production.

BenQ now aims to develop and design mobile phones for "big and well-know contractors," which can then market the handsets under their own brand name, Martin Prager, the unit's insolvency administrator, said yesterday.

The focus on research, development and design will probably lead to job cuts at the marketing, sales and administration departments, Prager said in a statement.

BenQ, Taiwan's biggest mobile-phone maker, said last month that it had decided to stop funding the German unit less than a year after taking over the unprofitable handset division from Siemens AG. The unit filed for insolvency protection the next day.

The German cellular-phone unit employs 3,000 workers and has offices in Munich and Bocholt and a factory in Kamp-Lintfort.

Prager, who on Sept. 29 started as insolvency administrator, approved Siemens' decision to deposit the 100 million euros (US$125 million) in an escrow account because some financial claims between BenQ and BenQ's German mobile-phone unit still need to be clarified.

BenQ said it would take "action" should Siemens fail to make payments related to the acquisition, after Siemens said on Oct. 5 that it halted planned payments of 100 million euro to BenQ.

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