Dark days
BenQ projects that until 2008, more than 40% of growth in the global mobile market will be in Asia. Currently, BenQ maintains five mobile phone production sites worldwide, with plants in China's Suzhou and Shanghai accounting for 45% of overall mobile phone production, that in Germany for 30%, and that in Brazil for 15-20%. The Mexico plant, where mass production just recently came online, is mainly for supplying North American and Latin American markets. A new plant in the Czech Republic will supply European Union markets.
At present, BenQ's global workforce has reached over 20,000 persons in more than 70 countries. Moreover, with the Taipei headquarters as its center, BenQ's presence stretches west to Germany's Munich and east to Brazil's Sao Paolo, spanning the three continents of Europe, America, and Asia.
BenQ continues to expand in scale, but in mid-March of this year, the enormous losses revealed in the financial results for the first quarter after its acquisition of Siemens' mobile phone unit were stunning. BenQ's stock price immediately dropped by close to 20%.
Tong explains that although the fourth quarter of last year saw post-acquisition revenues reach NT$66 billion, more than double third-quarter revenues, operating expenses and various other costs also rose--more than tripling in fact--resulting in an operating loss. For 2005 as a whole, the losses reached NT$9.97 billion, marking the first time since it had gone public in 1996 that BenQ (then Acer Peripherals) recorded a yearly loss. Many large international securities firms project that BenQ's losses this year will exceed NT$9 billion.
On the third day after the financial results were announced, Chairman K.Y. Lee sent a long letter to employees, in which he urged them not to be discouraged, telling them that the painful period after the acquisition would eventually pass, and BenQ would continue the battle to create a global brand. The facts show that while before BenQ took over, Siemens' mobile phone unit was losing an average of NT$200 million per day, losses have now been reduced to NT$100 million per day. It is reasonable to expect that BenQ will be able to resurrect itself.