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Amoi Strives for Mobile Phone Business TurnaroundSHENZHEN, Jul 20, 2009 (SinoCast Daily Business Beat via COMTEX) -- Amoi Electronics Co. Ltd. (SHSE: 600057), an electronics maker on the edge of delisting, is seeking a way out for its declining mobile phone business. Amoi has inked a cooperation agreement with a Shenzhen-based telecom product company. Under the agreement, Amoi outsources its mobile phone brand and operation rights to its partner, disclosed a person in the know, adding that the two parties will join hands on 2G, 2.5G, as well as 3G handset research, development, production, and sale. In detail, Amoi will be responsible for R&D and its partner will be in charge of mobile phone distribution. Amoi and its cooperator have set up an operating center in Shenzhen, south China, said the insider. According to their plan, two types of Amoi mobile phones will be launched in July 2009 and the number will be increased to 10 by October. Amoi-branded products will appear on the main promotion lists of some nationwide mobile phone retail chain operators, such as Zhongyu, D.Phone Mobile Retail Chain (D.Phone), and Tiantian Mobile. Market observers described such an alliance as a forced choice when the Xiamen mobile phone maker is burdened with heavy debts. Outsourcing mobile phone production and brand operation to its partner is one of the few ways for Amoi to bring in profits while avoiding a possible swelled loss, pointed out an executive for a domestic mobile phone company, noting that the decisive factor is the operating capacity of the Amoi partner. Set up in September 2006, the Amoi cooperator serves as a national and provincial distributor for domestic mobile phone makers like TCL and Changhong. The cooperation is one of the most effective ways to secure a continuous product supply and strengthen the Amoi brand awareness in the market, noted Xi Dawei, general manager of Amoi partner. The most important task at the moment is to create market atmosphere for Amoi mobile phones and resume distributors' confidence in the mobile phones, said the general manager. Before reaching the mobile phone brand operation outsourcing agreement, Amoi had slashed production and marketing because of the lack of working capital. It started to dismiss its marketing branches and cut jobs since October 2008. Amoi scored sales revenues of CNY 1.6839 billion for the year ended December 31, 2008, dropping 51.2% from CNY 3.4505 billion in 2007. Total profit narrowed down to minus CNY 750.9857 million, compared with minus CNY 872.4475 million in 2007. Net profit attributable to shareholders of the listed company was minus CNY 702.9938 million. Basic and diluted earnings per share both stood at minus CNY 1.64. Total assets reached CNY 1.5883 billion by the end of 2008, according to the Shanghai-listed company's annual financial results. The dim performance was ascribed to the insufficient capital supply and slow product rollout. In addition, the Xiamen-headquartered electronics company incurred a net loss of CNY 48.2234 million, or net loss of CNY 0.11 per share, in the first quarter of 2009. Operating revenues amounted to CNY 68.6257 million, falling 90.54% year on year. Amoi Electronics suffered losses of CNY 100 million in 2006 and CNY 810 million in 2007, respectively. Its share trading was suspended about two months ago due to the three-year consecutive losses. Given that it failed to resume profitability after one-year share trading suspension, Amoi will be delisted from the bourse. So far, its liabilities have totaled CNY 2.7 billion and 20 bank accounts have been frozen. It can hardly pay back the debts by revenues from its current businesses. Its operating revenues for the full year 2009 are expected to be CNY 420 million. Expenses will amount to CNY 200 million or so. (USD 1 = CNY 6.83) Source: www.cb.com.cn (July 20, 2009) |