BenQ foresees disappointing Q4

The company blamed the 54 percent year-over-year drop in its net income for third quarter on declines in prices for LCD monitors

"While panel prices have been on the wane, we acquired them at a higher price which has in turn forced LCD monitors' ASP to slide."
 
Sheaffer Lee, president of BenQ
 
BenQ Corp (–¾Šî“d’Ê), the nation's No. 1 handset maker, told investors yesterday that it expects a flat fourth quarter with single-digit revenue growth.

BenQ blamed the disappointing forecast to declining average selling prices (ASPs) of liquid-crystal-display (LCD) monitors that make up nearly half of its sales.

"While panel prices have been on the wane, we acquired them at a higher price which has in turn forced LCD monitors' ASP to slide," BenQ's president Sheaffer Lee said.

The price cuts did not stimulate market demand as expected, because people held off making purchases in anticipation of further reductions, Lee said.

The falling monitor ASP caused the company's net income to plunge by 54 percent to NT$1.37 billion in the third quarter, or NT$0.59 a share, from a year ago.

BenQ reported NT$2.97 billion in net income, or NT$1.28 per share, in the previous quarter.

For the first nine months of the year, BenQ posted net income of NT$7.42 billion, up 44 percent from a year ago, on revenue of NT$124.62 billion, a jump of 48 percent year-on-year.

Gross margin was 11 percent in the third quarter, on par with the previous quarter's 11.4 percent. But the figure may not climb further until the prices of LCD monitors stop dropping, Lee said.

Promotion strategy

To help improve its margins, BenQ is considering a more aggressive promotional strategy for its brandname mobile phone products, said vice president Jerry Wang.

BenQ's own-brand business made up 34 percent of its total sales between January and last month, up from 31 percent at the end of second quarter, with the remaining 66 percent for contract manufacturing.

Wang said BenQ plans to focus on high-end handset products that bear its name while manufacturing low-end products for clients.

Emerging markets

Besides securing close cooperation with European operators such as Telecome Italy Mobile, the company has targeted emerging markets with more than 50 percent growth potential, such as Turkey and Russia, to sell its own-brand handsets.

The company declined to specify how many handsets it has shipped in the first nine months of the year. BenQ previously said it wanted to ship 16 million handsets this year.

BenQ, which will also ship over 400,000 projectors this year, hoped to enter the ranks of the world's top four vendors in the fourth quarter, up from the seventh place in the second quarter, Lee said.

The company -- which planned to ship between 8 million and 10 million LCD monitors -- has seen monthly shipments of between 500,000 and 600,000 units in the first nine months. It expects to increase shipments to 700,000 units per month in the fourth quarter.

Source: Taipei Times