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BenQ Posts Loss, Blames Mobile Phones

10/24/2006 11:37:00 AM Eastern

Taoyuan, Taiwan – BenQ reported a net loss of $592.3 million during the first nine months of 2006 due to problems with its mobile phone business that it acquired from Siemans AG last year.

BenQ said sales for the company’s core business, excluding sales attributable to its BenQ Mobile German subsidiary, were $1.22 billion during the third quarter. For the first nine months of the year BenQ’s core business recorded sales of $4.62 billion.

At the same time its board approved the sale of BenQ's Jiandong plant and associated land in Gueishan Industrial Park to Daxon Technology; additionally, the board also authorized future disposal of the shares that BenQ holds in Gallant Precision Machining.

BenQ's board decided on Sept. 28 to discontinue capital injection into the company's BenQ Mobile German subsidiary. Its German subsidiary – BenQ Mobile GmbH & Co OHG – subsequently filed for insolvency protection as a result. “Each of the subsidiaries impacted by the filing will evaluate their financial condition and determine whether they should also file for insolvency protection. We believe the decision to seek insolvency protection on the part of our mobile-handset subsidiaries should have a limited impact on BenQ's non-handset operations,” according to Eric Ky Yu, BenQ's Senior Vice President of Finance and Spokesperson.

With no more funding commitment into the company's BenQ Mobile German subsidiary, “we are looking to lower the company's debt level over the next few quarters by implementing a proactive debt-repayment plan,” according to Yu.