Mobile problems in revenue shortfall cited by Parent company BenQ will lay off 527 staff from it’s Germany mobile subsidiary.These job cuts are being linked to BenQ’s struggle with Siemens mobile phone division, which it took over last year.
Analysts from Masterlink Securities said, “It has been nine months since BenQ merged with Siemens’ handset division and established BenQ Mobile. During this time, market share and revenue continue to drop while the company continues to book losses.”
In June 2005, Siemens paid over $300 million to Benq to take the troubled mobile division off its hands.
Since BenQ took over the Siemens mobile operation it has been losing $3.1m a day.
The blame for a drop in revenue this quarter has been placed on problems at the mobile division and poor sales of LCD monitors and optical disk drives.
Eric Ky Yu, BenQ said, “The revenue shortfall was also caused by delays in ramping up BenQ’s newly launched handsets, which we are in the process of correcting,”
At its core business for the month of June revenues were down approximately $570m from the previous two months, reported BenQ.
Layoffs at BenQ Mobile coincide with the end of a one-year agreement to keep over 1,900 former Siemens staff on the payroll. The agreement has now extended to the end of this year.
Over 110 research and development engineers, and 54 administrators will lose their jobs.
BenQ Mobile’s website is advertising more than 40 vacancies in Germany, six of them in research.
Analysts say BenQ has had trouble integrating Siemens’ established mobile business with its own smaller operation.
Yu said, “complexities associated with product roll-out in multiple countries, as well as platform transitioning, are complicating our efforts to fulfil existing pipelines of business which have been quite solid to date,”
BenQ hopes to raise prices to restore profits, whilst attempting to deal with these issues.
Yu said, “although we will be short of our quarter-on-quarter guidance, we have identified the bottlenecks and are implementing measures to solve these constraints as well as accelerating internal restructuring effort,”
“Our aim is to steadily raise the average selling prices. Looking at our exciting portfolio of BenQ-Siemens handsets which are significantly upgraded in terms of form factor, multimedia and innovation, we believe this is a realistic target in view of our newly established category leadership.”
BenQ sold a former Siemens research centre; that employed approximately 250 staff, to Motorola earlier this year.