BenQ chief offers to quit over mobile fiasco

By Simon Burns

Mar 23 2007 1:52PM

Management rejects offer as mobile creditors line up.

Fallout from a disastrous mobile phone deal continues at Taiwanese manufacturer BenQ, which has reported a net loss of US$238 mn for the fourth quarter of 2006.

The company has suffered five consecutive quarters of losses following its takeover of Siemens' mobile phone division.

K Y Lee, BenQ's founding chairman and chief executive, offered his resignation to take responsibility for the mobile division's problems earlier this week.

However, BenQ announced that the board "demanded he continue his role to reach the target of turning around the company as soon as possible".

The company blamed the losses on the mobile phone business, and servicing and warranty costs in particular.

Consolidated sales for the normally strong fourth quarter slid to US$1.04bn, down from US$1.22bn in the previous quarter.

In Germany, administrators called in to wind up the bankrupt BenQ Mobile division told reporters they were examining whether BenQ could be liable for US$1.6bn in debts owed by the subsidiary.

Adding to the company's problems, last week BenQ chief financial officer Eric Yu was detained on the order of a prosecutor investigating allegations of insider trading one year ago.

BenQ makes or sells a wide variety of PC peripherals and consumer electronics products, including LCD monitors. The company continues to manufacture mobile phones in Asia.

BenQ's troubles are a marked contrast to the successes of its former parent company, Acer, which has surged ahead in the PC and notebook markets over the past year.

Acer and BenQ remain affiliated, with substantial cross shareholdings, common investors and some executives moving between the two firms.