Mobile Phones Take Back Seat at Revamped BenQ

Taiwan's BenQ Corp. launched as a new corporate entity on Sept. 1, with plans to focus on digital projectors, computer monitors and other electronics, while its former main business, mobile phones, takes a back seat.

It's a big change from a year ago. BenQ has now come full circle from its 2005 takeover of Siemens AG's mobile phone unit. The Taiwanese company was never able to turn the troubled business around, despite Siemens paying BenQ ,250 million (US$340.8 million) to take the ailing division off its hands. Six money-losing quarters after the acquisition, BenQ called it quits, citing cutthroat competition and an inability to drive down costs at the German unit. By then, it had racked up losses of over ,840 million.

In its new form, BenQ is the branded division of Qisda Corp., which replaced the old name, BenQ, as the legal entity and the company listed on the Taiwan Stock Exchange. Qisda is the manufacturing side of the former BenQ, and the plan is to spin off the new BenQ within the next few years once it's healthy.

One of the biggest changes at BenQ is a lighter focus on mobile phones. While BenQ will still market handsets and focus on select markets, it will drop high profile advertising campaigns such as sponsorship of the Real Madrid football club and other big budget programs. Instead, it will target a smaller budget on its strongest products.

This year, the company's best products are digital projectors and computer monitors, which it expects to lead it to a break-even year on sales of around NT$60 billion (US$1.82 billion). By 2009, the company forecasts sales to reach NT$100 billion.

Hurdles remain. The insolvency administrator of the company's former mobile phone unit in Germany, BenQ Mobile GmbH & Co. OHG, is suing Qisda to recoup over ,100 million in past account payables and employee bonuses.

Qisda is considering filing counterclaims against the lawsuits.

Qisda executives also face the prospect of jail time for alleged insider stock trading in Taiwan, related to when the company revealed losses tied to BenQ Mobile.

The Taoyuan District Court in Taiwan started court proceedings against some Qisda executives in mid-July, including Chairman K.Y. Lee and Chief Financial Officer Eric Yu.

Qisda has denied any wrongdoing on the part of its executives.

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