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Siemens to Sell Mobile Division

June 08, 2005|From Associated Press

FRANKFURT, Germany — Siemens said Tuesday that it would sell its mobile phone division, which has been struggling with poor sales, to Taiwan's BenQ Corp.

Terms weren't disclosed, but Siemens said it would record a pretax charge of 350 million euros ($429.5 million). Siemens agreed to acquire 50 million euros ($61.4 million) of new BenQ shares as part of the transaction.

The decision to sell the unit outright came despite predictions that the Munich, Germany-based company would form a joint venture. But Chief Executive Klaus Kleinfeld said the deal would keep customers, workers and stockholders happy.

"With this partnership, we have found a sustainable perspective for our mobile phone business," he said.

BenQ is Taiwan's biggest maker of mobile phones, selling them under its own name in China. The company, spun off from electronics company Acer Inc. in 2001, also manufactures phones for Motorola Inc. and NEC Corp.

Eric Yu, BenQ's chief financial officer, said the takeover would help the company reach more than $10 billion in annual revenue.

Regulatory agencies in Europe and BenQ's shareholders still must approve the deal. Siemens expects the sale to be completed by the beginning of the fourth quarter.

Siemens said in April that it planned to unload a majority stake in its cellphone unit, which reported a loss of 138 million euros ($169.35 million) in the second quarter.

The company has endured poor sales and has steadily lost market share, falling to just 5.5% of the global market at the end of March, down from 8% last year, according to research firm Gartner Inc.

The company trails Nokia Corp., Motorola and Samsung Corp., according to Gartner's data.

BenQ will use the Siemens brand for as long as five years. The German company will keep hold of its cordless phone business.

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