BenQ Corp.'s Failed Acquisition of Siemens' Mobile Devices Division

            
 
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Case Details:

Case Code : BSTR250
Case Length : 17 Pages
Period : 2005-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : BenQ Corp. and Siemens AG.
Industry : Telecom
Countries : Worldwide

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Excerpts

The Acquisition

In April 2005, Siemens' mobile devices division reported worldwide sales of 9.3 million units and US$ 179 million in losses for the first quarter of 2005. With a turnaround seeming impossible to achieve, Klaus Kleinfeld (Kleinfeld), the CEO of Siemens, announced that Siemens was looking to sell the mobile devices division. He also stated that Siemens might retain a minority stake in the division.

However in June 2005, BenQ announced that it had acquired the whole stake in Siemens' mobile devices business. It renamed the division BenQ Mobile GmbH (BenQ Mobile). The acquisition, effective from October 1, 2005, created one of the world's largest mobile handset makers.

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BenQ Chairman & CEO, K.Y. Lee (Lee) said, "With the acquisition of Siemens's mobile phones business, we are rapidly approaching our goal to become one of the world's leading players in the mobile phone industry...

Post-Acquisition

In the months following the acquisition, several problems emerged. In early 2006, BenQ Mobile undertook a series of cost-cutting measures; it closed down a design center in Ulm, Germany, sold the research and development facility in Aalborg, Denmark to Motorola and brought all research and development work to Munich.

The company estimated that these measures would reduce expenditures considerably and it would be able to make a profit in the fourth quarter of 2006. The first BenQ Siemens brand mobile phones were unveiled in January 2006.

The new models, which included the EF81, the S68, and the S88, were feature-rich with camera and Bluetooth capabilities. In March 2006, the BenQ-Siemens P51, a smartphone, was launched. However, customer response to the new products was lukewarm...

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