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BenQ to rename itself, sell brand business after loss

Although Q1 losses narrow from last year, chairman quits on globalized branding

BenQ to rename itself, sell brand business after loss

BenQ Corp., Taiwan's largest maker of branded consumer electronics, plans to spin off its branded business and focus on manufacturing under a new name after the company reported its sixth straight quarterly loss.
The first-quarter net loss narrowed to NT$1.76 billion (US$53 million), or NT$0.69 a share, compared with a loss of NT$5 billion, or NT$1.95, a year earlier, the Taoyuan, Taiwan-based company said in a statement. Five analysts surveyed by Bloomberg News had a median loss estimate of NT$1 billion.
Chairman K.Y. Lee, 54, has failed in his bid to build a globally recognized brand, six years after he changed the name of the former Acer Inc. unit to BenQ. The company will be renamed Jia Da Corp. and will return to its manufacturing roots, which began 23 years ago. The branded unit will keep the BenQ name and be spun off on September 1, BenQ said.
"This is good news because the branding business is money- losing," said Michael On, who doesn't own BenQ shares in his US$60 million portfolio at Beyond Asset Management Co. in Taipei. "Their manufacturing business is the way for them to return to profitability."
First-quarter revenue fell 57 percent to NT$24.95 billion from NT$57.94 billion a year earlier, the company said. Shares of BenQ rose 2.8 percent to NT$12.90 in Taipei before earnings were announced, compared with a 0.8 percent decline in the benchmark Taiex index.
Chairman Lee offered to resign in March after BenQ posted a record loss for 2006, reflecting his failure to boost earnings through the acquisition of Siemens AG's unprofitable cell-phone unit in 2005. The company said in September that it would stop funding the German mobile-phone subsidiary, about a year after taking it over. The unit is being liquidated.
Mobile communications products accounted for 6 percent of sales in the first quarter, from 35 percent a year earlier. Computing products, which include liquid-crystal display monitors, comprised 74 percent of revenue, compared with 57 percent a year earlier.
The sale of the company's branded operations marks a return to the manufacturing business that provided BenQ with consistent profits from making phones, computer monitors and scanners for companies such as Motorola Inc. Acer Communications and Multimedia Inc. became BenQ Corp. in December 2001, the first step in Lee's plan to build a global brand.
"I believe very soon we can be back to where we were five or six years ago," Lee said at an investors' conference in Taipei.
The BenQ branded unit will seek a "prestigious" strategic investor and will have capital of NT$3.6 billion, the company said, with its mobile phone unit to be split between manufacturing and branded operations.
Lee will be chairman of the spun-off unit, the company said.


Updated : 2021-10-22 01:33 GMT+08:00