BenQ announces massive loss for the 4th Quarter

Quakester2000

March 15, 2006

BenQ has announced a
massive loss of NT$6.02 billion ($185.2 million) for the 4th Quarter due to
restructuring costs for its Siemens handset division. While the loss is a major
blow it did post a rise in revenues rising to NT$66.3 billion up from NT$34.09
billion in the previous quarter.

BenQ has acknowledged
that the loss is much worse than expected but did say that the worst is now
over. The company expects that the combined cooperation between it and its
Siemens division will start driving BenQ's business forward in the 1st
quarter. The company did say that significant improvement can be expected in the
2nd Quarter. The company expects to start making a profit in the 4th
Quarter.

This loss is the first
that BenQ has made since it was first listed in the Taiwan stock
exchange in 1996. The takeover of Siemens mobile occurred in October but with no
new handsets to sell it meant the company had nothing to sell to boost sales.
BenQ has been clearing inventory of low end handsets in the 4th
Quarter along with low margin handsets worth NT$1 Billion this brought down
margins.

BenQ also blamed its
US division for its poor
fourth quarter sales and said it will be reorganizing and changing its strategy
for the US market.

BenQ
today reported an unexpected huge loss of NT$6.02 billion (US$185.2
million) for the fourth quarter of 2005 due to restructuring costs for the
takeover of Siemens' handset division. The
company posted NT$66.3 billion in consolidated revenues for the fourth
quarter, up from NT$34.09 billion in the previous quarter. It recorded net
profits of NT$18 million in the third quarter.

BenQ admitted that the loss was more than
expected, but said the worst is over. The company expects the synergy from
the Siemens' deal to start driving up BenQ's business in the first
quarter. A significant rebound can be
expected in the second quarter, and BenQ will turn a profit in the fourth
quarter, the company said.

It is the first time the company has reported
a net loss since it was first listed in the Taiwan Stock Exchange in 1996.
BenQ said the takeover of Siemens occurred in
October with no new products to boost sales in the fourth quarter. BenQ in
the fourth quarter was also actively clearing inventories of some low-end
and negative-margin handset models, worth NT$1 billion in total, which
pushed down margins.

The company also blamed its US operations for
its poor fourth-quarter sales, saying it will adjust its strategies and
organization in the US market.

Source: Digitimes