BenQ posts losses for first quarter

The firm said first quarter losses narrowed from the fourth quarter, adding it expected to book profits in the current quarter

BenQ Corp (明基), the No.6 mobile phone vendor globally, yesterday posted its second straight quarter of losses, due to its takeover of Siemens AG's ailing handset unit last year.

The company, however, expects operating losses to narrow significantly this quarter on rising sales of high-margin products.

BenQ said net losses narrowed to NT$4.99 billion (US$156 million), or NT$1.95 per share, in the first quarter, from NT$6.02 billion, or NT$2.45 a share, in losses for the final quarter of last year.

Operating losses also improved 8 percent to NT$8.33 billion from NT$9.06 billion in the same period.

The losses contrast with earnings of NT$303 million, or NT$0.12 per share, a year ago.

Sales rocketed 80 percent to NT$58.26 billion in the January-March period, from NT$32.34 billion in the first quarter of last year, after the company acquired Siemens' mobile phone division. The deal took effect last October.

"We will deliver refreshing results [for the second quarter]," BenQ chairman Lee Kun-yao (李焜耀) told investors yesterday.

BenQ would reduce its operating losses sharply, Lee added.

BenQ said it would start to book profits this quarter, after receiving up to NT$6.2 billion in proceeds from selling an optical drive division to local firm Lite-On IT Corp (建興電子).

BenQ also set an aggressive target, aiming to turn around its struggling mobile phone division in the final quarter of this year.

Before the takeover, mobile phone sales only accounted for 11 percent of BenQ's total sales, but climbed to 35 percent last quarter, according to the company.

With high-end products in the pipe line, average selling prices should increase by more than 10 percent this quarter from the first quarter, while handset sales should expand more than 30 percent from 7 million units in the first quarter, president Sheaffer Lee (李錫華) said.

But analysts said the goal appeared difficult to achieve.

"BenQ's new products are more attractive to potential customers, but it will still take us several months to see whether the interest will translate into real profits or not," said Vincent Chen (陳豊丰), an analyst with CLSA Ltd, in Taipei.

BenQ told investors that mobile operators Vodafone, T-Mobile, Orange and Telefonica may be added to its customer list during the three-month period to June.

"BenQ is still losing market share," Chen said.

Chen also cast doubt on BenQ's ability to boost average selling prices, saying operating expenses would jump from promoting new products.

source: Taipei Times