TAIPEI, Taiwan—Enough already—that’s the decision handed down from BenQ Corp. amid heavy losses at its mobile venture, BenQ Mobile. The company announced that it won’t pour any more money into its German-based mobile-phone subsidiary.
As a result, BenQ said its handset subsidiary may file for bankruptcy protection and noted that operations in Germany—including Munich, Bocholt and Kamp-Lintfort—may be “affected.” The company did not provide details.
In addition, BenQ said its handset subsidiaries in Brazil and other locations are too reviewing their financial positions.
However, the company stressed that it plans to continue its branded mobile business in selected markets, and emphasized that adjustments to its mobile operations won’t weaken the company’s “unwavering commitment” to its branded business or its focus on providing manufacturing services and operations in Asia.
“Since October 2005, we have committed and invested an inordinate amount of capital and resources into our German mobile-phone subsidiary,” said K.Y. Lee, chairman of BenQ. “We have worked alongside our German colleagues from the beginning and were able to achieve quite a number of milestones. Despite the progress achieved in reducing cost and expenses, widening losses have made this very painful decision unavoidable.”
In August, BenQ announced plans to inject $400 million into its struggling handset business while spinning off non-mobile businesses to strengthen the handset brand, which ranks just below the world’s top five handset vendors in terms of market share.
At the end of the second quarter, BenQ posted its third straight quarterly loss and forecast flat sales and shipments in the third quarter. Second-quarter losses came in at $76.5 million vs. a net profit of $14.6 million in the year-ago quarter. BenQ’s handset division shipped 7.3 million units during the second quarter, according Strategy Analytics. At the time, BenQ said half of its annual revenue came from sales of mobile phones.
BenQ Mobile has been marketing high-end mobile phones in its home market of Taiwan, as well as in China, Thailand, Germany, Spain and Russia. Meanwhile, the world’s top five handset manufacturers have increased their aggregate market share from 81 percent in the first quarter to 83 percent in the second quarter, squeezing the remaining share available to second-tier vendors such as BenQ Mobile.
