BenQ faces uphill task to make Siemens phone unit profitable
AFP, Taipei
Taiwan's BenQ Corp faces a formidable challenge to turn around Siemens' mobile phone handset business, where continued heavy losses finally led the German electronics and engineering group to call it a day, analysts said Wednesday. They said the logic for the deal for both parties is simple enough in that Siemens is desperate to get rid of a seemingly never-ending cash drain while Benq, one of Taiwan's major electronics firms, is eager to expand its presence in Europe and the rest of the world. BenQ, however, will have to cut operating costs before it can make money and that could be difficult given it will not have a free hand to curtail production or lay off workers in Germany. Under an agreement announced Tuesday, BenQ will sell a 2.5 percent stake to Siemens for 50 million euros and secure another 250 million euros from the German group to support the future of the business. BenQ will take over handset business in the course of Siemens' fiscal fourth quarter, which runs through September 30. It will have the right to use the Siemens brand for five years and the mobile phone business will be headquartered in Munich. Siemens' mobile handset operations lost 138 million euros in the quarter ended March, bringing its total operating loss in the last four quarters to 510 million euros.
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