BenQ / Siemens fallout continues

3rd October 2006

The extraordinary collapse of BenQ's "BenQ-Siemens" mobile business in Europe took a new twist yesterday when Siemens created a €35 million fund for ex Siemens Mobile staff and announced that it was considering its legal position with regards to the BenQ-Siemens tie-up.

The €35 million figure includes a €5 million contribution that the Siemens board had awarded itself on the back of very strong growth of the Siemens business - in effect, the Siemens board of directors have stated that they will give up their pay rise to help their former employees. Around three thousand former Siemens employees are threatened with losing their jobs.

Siemens CEO, Klaus Kleinfeld was forthright in his opinion about BenQ: "We consider the actions of BenQ reprehensible, and we’re going to do everything we can to help the people affected," he said.

The terms of the original BenQ / Siemens deal in 2005 were unusual - essentially Siemens disposed of their entire mobile business and handed over a sum of money to BenQ in order to guarantee the continuation of the business. In addition, Siemens handed over a large number of patents and allowed the use of the Siemens name. Siemens are now claiming that "BenQ did not carry out its intentions with the seriousness with which these were represented to Siemens". It would have been much cheaper for Siemens to simply close the business, rather than transfer it to BenQ with the dowry.

Furthermore, we understand that Siemens is examining its legal position over the transfer of the patents to BenQ, and will almost definitely insist that BenQ cease using the "Siemens" name in any of its products. Siemens also made its position over the closure of BenQ Mobile's German operations clear - "the suggestion that we have been prepared to accept the bankruptcy of BenQ Mobile in Germany is pure slander" said the Siemens CEO.

This is a quite astonishing end to one of the best known European mobile handset manufacturers. Not only will this be the end of the short-lived BenQ-Siemens brand and the Siemens Mobile legacy, but it is unlikely that BenQ will be able to sustain any kind of mobile handset business in the future if Siemens moves against it.

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