BenQ promises big gains after Q1 handset slump

IDG News Service |  Mobile & Wireless

Nobody ever said turnarounds are easy. Siemens AG's loss-making mobile phone division has been hard for BenQ Corp. to swallow since its purchase late last year. The Taiwanese company on Monday reported its second straight quarterly loss since taking over the handset division, hurt by restructuring charges and a slump in handset sales.

But the mobile phone subsidiary promised big gains in the April to June financial period as it beefs up advertising in Europe for several new handsets models and prepares to launch even more.

BenQ posted a loss of NT$4.99 billion new Taiwan dollars (US$154.6 million) during the three months ending March 31, compared to a net profit of NT$303.2 million during the same time a year ago. The loss nearly met analysts forecasts, but was the company's second straight setback. In the fourth quarter of last year, its first after acquiring and setting up BenQ Mobile GmbH and Co. OHG, the Taiwanese firm reported an NT$6.02 billion loss.

Revenue also fell compared to the previous quarter, to NT$57.94 billion versus NT$66.30 billion during the fourth quarter last year. In the January to March quarter of 2005, BenQ reported revenue of NT$26.7 billion, but the figure is difficult to compare to this year because the purchase of Siemens' mobile phone division caused BenQ's revenue to double.

BenQ executives offered a bullish outlook for its mobile phones in the second quarter. Handset shipments are expected to grow 30 percent over the 7 million units sold in the first quarter and average selling prices will increase 10 percent, the company said.

"We should see a clear improvement on our bottom line in the second quarter," said Sheaffer Lee, president of BenQ.

The company expects overall revenue to rise 10 percent quarter-on-quarter during the three months that end June 30.

Clemens Joos, the chief executive officer of BenQ Mobile, said the new company has already become more efficient, shaving

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