Change Of Owner Doesn't Translate Into Change Of Fortune For Siemens Mobile Phone Unit

Failures

from the nobody's-answering-that-call dept

Last year, Siemens finally decided to sell its mobile-phone unit to Taiwan’s BenQ, since it had long been a drag on the company. Perhaps that should be “sell”, since BenQ didn’t pay anything for the unit, and Siemens spent 50 million euros on BenQ shares as part of the deal, and also pumped 250 million more into the unit to support it. As we noted at the time, it really wasn’t clear why BenQ thought they’d be able to turn the unit around — and they haven’t been able to, losing $760 million or so since they took it over, leading them to decide to pull the plug on it this week. The problem the unit faced when it was part of Siemens was clear: the top 5 handset vendors sell 80 percent of the world’s handsets, leaving about 100 other companies fighting for the other 20 percent, or roughly just 200 million handsets. For any company without the scale to break into the leading pack, business is going to be difficult. But while the market cheered BenQ’s decision, Siemens isn’t so pleased and says it’s considering its legal options while its former employees are getting angry too. Siemens was probably deluding itself a bit if it thought that BenQ could really turn the business around, and its haste to pawn the unit off on somebody instead of shutting it down may now come back to cause it some problems.