Taiwan's Compal to sell handheld computing business

Taiwan's Compal to sell handheld computing business

Notebook maker Compal Electronics has made a deal to sell its handheld computing division to an affiliate.

Taiwan's Compal Electronics, the world's second-largest contract notebook computer maker, will sell its handheld computing division to a mobile phone affiliate, Compal Communications, in order to ensure the affiliate can compete in a fast changing marketplace.

It's the second major deal for Taiwanese handset makers in a month, and points to increasing consolidation in the mobile phone industry. Taiwan's BenQ agreed to take over Siemens' loss-making handset division early last month.

The deal will add personal digital assistants, CDMA (Code Division Multiple Access) and 3G (third-generation) mobile phones, as well as other handheld computing devices to Compal Communications' product lines, which currently include GPRS (General Packet Radio Service) and GSM (Global System for Mobile Communications) mobile phones, the companies said in a joint statement.

Compal Communications will pay Compal Electronics 85.08 million new shares of stock for the division, according to the statement. The deal will be finalized at the start of 2006, pending government and shareholder approval.

Compal Communications, which counts Motorola as a major customer, will also gain additional sales and shipments through the purchase. The companies expect Compal Communications to ship 38 million handheld devices next year, up from a combined estimate of 29.1 million handhelds this year. Their combined shipments reached 11 million handhelds on sales of NT$25.2 billion (US$803.4 million) last year.

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