BenQ posts huge Q3 loss on BenQ Mobile write-down

BenQ Corp. posted its fourth straight quarterly loss in the three months ending Sept. 30, and expects further losses as it writes down debt after pulling funding from its German mobile phone unit.

The company just wasn't able to turn around the loss-making handset division it took over from Siemens AG last year, despite pouring hundreds of millions of dollars into the venture. In all, BenQ reckons it lost over US$1 billion through its mobile phone operations over the past year.

BenQ reported a loss of NT$12.22 billion (US$367.4 million) in the third quarter, its steepest loss since taking over BenQ Mobile GmbH & Co. OHG. The company attributed NT$11.8 billion of the loss to inventory reductions, impairment charges and other items related to BenQ Mobile and its decision to stop funding the German subsidiary going forward.

BenQ Mobile is currently working under bankruptcy protection on a plan for a comeback, but one that will leave 1,900 of the roughly 3,000 workers at the company without jobs. The company is expected to forsake the name brand business when it emerges from bankruptcy protection, and instead design handsets for customers such as mobile operators.

BenQ plans to forge ahead with its own mobile phone business, which was already making headway in Asia before it entered talks with Siemens. The Taiwanese handset vendor will continue to market mobile phones in the Asia-Pacific region and work to engage its Eastern European customers, the company said in a statement.

The company vowed to launch 14 new mobile phone models in 2007, and it will work to break even in the business again.

Analysts have cited various reason for the demise of BenQ Mobile, but mainly attribute it to stiff competition in the mobile phone market. Nokia Corp. and Motorola Inc. have gained market share this year, while BenQ and other smaller makers have lost share.

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