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123webguru News Desk
Siemens, BenQ to set up handsets venture
By Michael Able and Georgina Prodhan
FRANKFURT (Reuters) - Siemens (SIEGn.DE: Quote, Profile, Research) and Taiwan's BenQ (2352.TW: Quote, Profile, Research) are to set up a partnership in mobile phones, sources said on Monday, in a long-awaited solution for the German company that also gives BenQ access to new markets.
Sources familiar with the situation told Reuters the deal concerned only Siemens's loss-making mobile handsets unit and not its cordless phones. Siemens said in April it would carve out both mobile and cordless phones into a new legal entity.
The financial terms and ownership distribution in the new venture were not immediately clear. The German engineering conglomerate had said it was likely to retain a minority interest in any partnership.
"For Siemens, any marriage is a marriage made in heaven," said Nomura telecoms analyst Richard Windsor, when asked about BenQ's suitability as a partner.
Siemens shares, which had been strong all day on a Financial Times report it was to cooperate with BenQ, closed up 1.2 percent at 61.21 euros, the top gainer in a slightly weaker German blue-chip DAX index .
The Sueddeutsche Zeitung, in an unsourced article to be published in its Tuesday edition, said BenQ would own almost all of the new venture, with Siemens keeping a stake of less than 10 percent in order to signal its commitment to employees.
Germany's Manager Magazin reported that BenQ would completely take over the mobile-phones venture after one or two years of cooperation, citing a senior manager at Siemens's communications division.
BOARD MEETING
Both Siemens and BenQ declined to comment on reports of their cooperation, as Siemens's supervisory board held a meeting about the unit on Monday.
The deal will come as a relief to Siemens after a months-long quest for a partner or buyer for its mobile-phones unit, which has been losing more than 1 billion euros ($1.2 billion) a day.
Many investors had argued the consumer nature of the business made it ill-fitted to Siemens's already sprawling portfolio, which ranges from trams to turbines and hearing aids to outsourcing services.
For 3-year-old company BenQ, already Taiwan's top maker of computer gear and mobile phones, the deal will bring quick access to large European markets and propel it into the top 10 global handset vendors.
BenQ shares earlier closed in Taiwan slightly firmer at T$33.40, in line with the TAIEX index .
LARGE GERMAN STAFF
Siemens's mobile-handsets unit employs around half its 6,000 staff worldwide in its home country. Many of its German staff have job guarantees until 2006, which they gained in exchange for agreeing last year to work longer hours for no extra pay.
"If I was a BenQ shareholder, I'd be extremely concerned if I hadn't got absolutely rock-solid guarantees from Siemens about cost-cutting in Germany," he added. "They're employing too many people in Germany.
BenQ -- which also makes LCD monitors and televisions, laptops, CD-ROM drives and video projectors -- had sales of $4.7 billion in 2004, an increase of one-third on the previous year. It is about 15-percent owned by PC maker Acer Inc. (2353.TW: Quote, Profile, Research) .
Siemens's mobile-phones unit brought in 5 billion of the company's 75 billion euros in 2003/04 revenues, and made a loss of 152 million euros.
The German company has had quality problems with some of its handsets aimed at the high end of the market, while at the low end -- where it is stronger -- it has been losing a price war to heavyweight rival Nokia (NOK1V.HE: Quote, Profile, Research) and others.
Uncertainty over the future of the unit meant that when it reported half-year results at the end of April, Siemens was unable to affirm its goal of raising earnings this year.
(Additional reporting by Doug Young in Hong Kong)
($1=.8150 Euro)
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