BenQ considers insolvency for German phone unit

TAIPEI/FRANKFURT, Sep 28: Taiwan's BenQ Corp. said it might seek insolvency protection for its German cell phone unit as it struggles to turn around the business it bought last year from Siemens.

''Since October 2005 we have committed and invested an inordinate amount of capital and resources into our German mobile phone subsidiary,'' said BenQ Chairman K.Y. Lee in a statement on Thursday.

''Despite the progress achieved in reducing costs and expenses, widening losses have made this very painful decision unavoidable.'' A BenQ spokesman in Germany was even more definitive, saying that BenQ Mobile, which employs some 3,000 people in Germany, will file for insolvency in the next few days.

The spokesman said BenQ Mobile's cell phone operations would be continued from Asia.

The Taiwan group also added that it expected its losses to narrow significantly after the fourth quarter.

BenQ shares closed up 3.7 percent in Thursday trading in Taiwan.

''This is a sign of restructuring, but BenQ still has to pay some debts,'' said Daniel Chang, an analyst at Macquarie Securities. ''This is a bad thing for BenQ.'' BenQ, which is trying to become a major global cell phone brand, has struggled with the loss-making German unit since it acquired the business from Germany's Siemens last year.

At the time of the deal, German media reported that many of the unit's German-based employees had job guarantees until the middle of this year but that BenQ was not making any promises after that.

Last week, German media reported that BenQ was considering selling its German-based cell phone manufacturing operations.

The company is also moving to separate its cell phone business from its other businesses including PCs and other consumer electronics.

REUTERS