The firms are studying various ways of working together, including a possible merger, but no conclusions have been reached, IEC said in a filing to the Stock Exchange of Thailand.

IEC shares yesterday dropped 2.17 per cent to Bt2.70, while Bliss-Tel stock rose 7.49 per cent to Bt4.88.

IEC in March announced that 162.78 million of 784.55 million newly issued shares had been sold through a private placement. Earlier, its shareholders approved the issuance of 784.55 million shares for private placement or a share swap at a price of not less than Bt3 each.

Bliss-Tel is a leading mobile phone and accessories distributor. IEC is in the same business, but it also operates in engineering and information technology.

In the first quarter, IEC's net profit shot up from Bt25.03 million in the year-ago period to Bt104.22 million, while Bliss-Tel's net profit fell sharply from Bt48.35 million to Bt627,000.

Sicco Securities said in a recent note that the steep decline in gross profit margin from 8.12 per cent in the first quarter last year to 4.45 per cent in the first three months this year was the main cause for Bliss-Tel's disappointing performance.

"The company in the first quarter showed a mere net profit of [about] Bt630,000, though its sales surged 32.5 per cent year on year. Its selling and administrative expenses, which increased to 4.19 per cent quarter on quarter, and higher interest expenses from Bt11 million in the fourth quarter last year to Bt24 million, eroded the company's earnings," the brokerage said.

Political and economic uncertainties would put pressure on handset sales of Bliss-Tel in the second quarter.

Falling purchasing power will make operators launch promotional campaigns to boost sales and this will lower the average price per handset and narrow gross profit margin, the brokerage said.

It cut its sales estimate

for this year for Bliss-Tel by

8.8 per cent to Bt12.01 billion and has lowered its full-year net profit forecast to Bt90

million, down 21 per cent year on year.