Source: BusinessWeek
Time: January 3, 2007
Title: "Better Days Ahead for BenQ?"
Byline: "The mobile phone unit of the Taiwanese electronics company met a messy end, but analysts believe its parent could be headed for a rebound."
Authors: Brian Bremner

"The messy demise of BenQ Mobile-- the German mobile-phone unit that Taiwanese electronics company BenQ bought from Siemens in 2005 – has been painful for all parties involved. Siemens lost $1 billion on the unit before selling it and BenQ has taken a $300-plus million write-down on the assets. On top of that, nearly 3,000 employees are expected to lose their jobs in Europe.

Yet though BenQ's foreign venture ended in tears, some analysts thinks its stock price could be heading for a rebound once the liquidation procedures are finished in Germany later this year. BenQ Mobile, which lagged badly behind industry leaders Nokia, Motorola, and Samsung Electronics, cut off funding to the unit last fall and tried in vain to line up a new investor by Dec. 31.

The melodrama has hit BenQ shares hard. Its stock traded in Taipei has fallen 47% to NT $17.55 (54 cents). BenQ also recorded a third-quarter loss of $367 million, its biggest loss in about five years.

LCD Growth Potential

All that said, Taipei-based Macquarie Research analyst Dominic Grant has issued an "outperform" rating on the stock and thinks it could rebound down the road to the NT $20.0 range. He cautions that court proceedings surrounding the wind-down of the failed mobile phone are far from over, and there could be some unpleasant surprises ahead.

He adds that BenQ is alsoa maker of liquid crystal display components and that business is far stronger than is currently being recognized by investors. "BenQ is not just a handset maker, and a big part of their revenues comes from LCD monitors," he says. The mobile phone debacle "has caused much of the other assets to be de-rated," he adds.

Another question going forward is just how aggressively BenQ, once exclusively a contract manufacturer, will pursue its strategy of selling its own branded phones. Grant thinks some rethinking of the company's overall strategy and some corporate restructuring are in the cards."