The head of BenQ Corp. retained his chairmanship but will lose his CEO titles at some companies in the BenQ Group, amid a management reshuffle announced just weeks before his insider stock trading case begins in Taiwan.
K.Y. Lee, the long-standing chairman of the company and head of the BenQ Group, lost his CEO title at LCD (liquid crystal display) panel maker AU Optronics Corp., and at BenQ Corp., an official confirmed Monday.
The announcement comes less than a year after BenQ racked up over US$1 billion in losses in a high-risk attempt to build a global name in the mobile phone business. The company opened BenQ Mobile GmbH & Co. OHG in October 2005 after taking on Siemens AG's mobile phone unit. But a year later, BenQ called it quits amid stiff competition and heavy losses. Since then, its management has faced blame for betting the company on what turned out to be a losing strategy.
Financially, the company posted losses in every quarter after the handset unit acquisition, and its bottom line continues to bleed.
The company's dwindling financials, fears that German creditors might go after the parent after the collapse of BenQ Mobile, and the sell-off of BenQ assets to shore up its balance sheet has sent its share price down nearly 29 percent so far this year to close at NT$12.45 (US$0.38) Friday on the Taiwan Stock Exchange.
Just when it seemed BenQ's troubles couldn't get any worse, Taiwanese prosecutors raided BenQ Corp.'s offices and hauled away three executives for questioning over alleged insider stock trading related to when it revealed losses incurred by BenQ Mobile. That was in March, and in all, five executives have been formally charged.
The current management reshuffle, and the announcement of a new name for BenQ Corp., comes just weeks before court proceedings are set to begin on the insider stock trading case at the Taoyuan District Court in Taiwan. Officials said procedural meetings are slated to begin July 12.
BenQ has denied any wrongdoing on the part of its executives.
The company name change is part of a broader reorganization. The BenQ Corp. name and all businesses related to its brand are being spun off, while the manufacturing operations will continue to operate under a new name, Qisda Corp. It's a common strategy in Taiwan. Companies that make products on behalf of overseas customers as well as under their own name brands separate the contract manufacturing operations from the name brand business in order to avoid any conflict of interest with customers.
The reorganization is expected to be final by Sep. 1, 2007. K.Y. Lee will be chairman of Qisda, BenQ, and AU Optronics once the change is finished, but he will not hold the CEO title at any of the companies. Hsiung Hui, an executive vice president at AU Optronics, will become the new president of Qisda, while Conway Lee will become the president of BenQ. The CEO title will not be used at either company, a BenQ representative said.
At AU Optronics, H.B. Chen will take over the CEO title, and L.J. Chen will take on dual roles of president and COO (Chief Operating Officer).