Post by DITO on Sept 29, 2006 12:24:16 GMT
Q: What are the main reasons for BenQ to decide to discontinue operating BenQ Mobile, and why did BenQ Mobile fall short of expectations?
A: We have been trying to improve the cost structure of our handset subsidiary BenQ Mobile in Germany for over the past year. However, the costs there were not falling as fast as we had expected, while the introduction of new products was lagging far behind schedule. As a result, BenQ Mobile failed to reach its financial targets for the past three quarters. The decision was crucial because we believe that losses at BenQ Mobile cannot be reduced significantly within a short time and it will still require a large amount of capital if it hopes to breakeven.
Q: When did BenQ start considering withdrawing from BenQ Mobile?
A: Originally, BenQ's board of directors decided in August to inject an additional US$400 million in capital into BenQ Mobile to help improve its financial status after the parent company recognized a loss of 600 million euros from BenQ Mobile in a nine-month period since October 2005. However, an evaluation conducted by the parent company in September found that BenQ Mobile still would not reach its target in the third quarter of this year and that the chance is slim for BenQ Mobile to reach breakeven by the second quarter of next year.
Q: BenQ Mobile is considering filing for insolvency protection. What does that entail?
A: It is a sort of mechanism initiated by the German government to protect the interest of creditors under which BenQ Mobile will hand over its management to a new management team appointed by the German government. However, BenQ will retain its ownership over the subsidiary.
Q: Will BenQ's sale of handsets be affected by its decision to separate from BenQ Mobile and will BenQ adjust its brand policy?
A: Our contract with Siemens still remains valid and we will continue to use the ‘BenQ-Siemens' name to sell our handsets and BenQ Mobile will also be allowed to use the same dual-brand name if it continues operating under a new management team appointed by the German government.
BenQ (including BenQ Mobile) shipped a total of 7.2 million handsets in the second quarter of this year. We originally targeted third-quarter shipments to be at the same level as in the second quarter, with the amount to reach nine million units in the four quarter. We expect our fourth-quarter shipments to be affected by our decision to stop injecting capital into BenQ Mobile since the subsidiary is handling our sales in Europe. However, our sales in the Asia-Pacific region are unlikely to be affected as the business in this region has been controlled by the parent company in Taiwan.
We will also conduct an evaluation of the financial situation of our subsidiary in Brazil, to see if we should continue its operations or not.
Q: Under the contract between BenQ and Siemens signed last year, the German company is to pay BenQ 250 million euros in cash plus an investment of 50 million euro in BenQ. Will Siemens fulfill its commitment?
A: As for the 250 million euro amount, Siemens already paid 80 million euros and the remaining 170 million euros will be paid in the fourth quarter, with 50 million euros to be transfered to BenQ Mobile directly and 120 million euros directly to BenQ. We have not yet discussed with Siemens our decision to discontinue operating BenQ Mobile, but we think that our decision did not violate our agreement with Siemens
A: We have been trying to improve the cost structure of our handset subsidiary BenQ Mobile in Germany for over the past year. However, the costs there were not falling as fast as we had expected, while the introduction of new products was lagging far behind schedule. As a result, BenQ Mobile failed to reach its financial targets for the past three quarters. The decision was crucial because we believe that losses at BenQ Mobile cannot be reduced significantly within a short time and it will still require a large amount of capital if it hopes to breakeven.
Q: When did BenQ start considering withdrawing from BenQ Mobile?
A: Originally, BenQ's board of directors decided in August to inject an additional US$400 million in capital into BenQ Mobile to help improve its financial status after the parent company recognized a loss of 600 million euros from BenQ Mobile in a nine-month period since October 2005. However, an evaluation conducted by the parent company in September found that BenQ Mobile still would not reach its target in the third quarter of this year and that the chance is slim for BenQ Mobile to reach breakeven by the second quarter of next year.
Q: BenQ Mobile is considering filing for insolvency protection. What does that entail?
A: It is a sort of mechanism initiated by the German government to protect the interest of creditors under which BenQ Mobile will hand over its management to a new management team appointed by the German government. However, BenQ will retain its ownership over the subsidiary.
Q: Will BenQ's sale of handsets be affected by its decision to separate from BenQ Mobile and will BenQ adjust its brand policy?
A: Our contract with Siemens still remains valid and we will continue to use the ‘BenQ-Siemens' name to sell our handsets and BenQ Mobile will also be allowed to use the same dual-brand name if it continues operating under a new management team appointed by the German government.
BenQ (including BenQ Mobile) shipped a total of 7.2 million handsets in the second quarter of this year. We originally targeted third-quarter shipments to be at the same level as in the second quarter, with the amount to reach nine million units in the four quarter. We expect our fourth-quarter shipments to be affected by our decision to stop injecting capital into BenQ Mobile since the subsidiary is handling our sales in Europe. However, our sales in the Asia-Pacific region are unlikely to be affected as the business in this region has been controlled by the parent company in Taiwan.
We will also conduct an evaluation of the financial situation of our subsidiary in Brazil, to see if we should continue its operations or not.
Q: Under the contract between BenQ and Siemens signed last year, the German company is to pay BenQ 250 million euros in cash plus an investment of 50 million euro in BenQ. Will Siemens fulfill its commitment?
A: As for the 250 million euro amount, Siemens already paid 80 million euros and the remaining 170 million euros will be paid in the fourth quarter, with 50 million euros to be transfered to BenQ Mobile directly and 120 million euros directly to BenQ. We have not yet discussed with Siemens our decision to discontinue operating BenQ Mobile, but we think that our decision did not violate our agreement with Siemens