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China rejects Siemens phone business

Ningbo Bird not interested in deal

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Rumours that Siemens was planning to offload its loss-making hardware division to China were dispelled today by the prospective partner company, Ningbo Bird. The Chinese manufacturer said that it was not considering buying the division from Siemens, and added that neither had it been approached by Siemens about such a deal.

Meanwhile, executives at Siemens consider their options, after forecasting a third consecutive quarterly loss from the division. At a press briefing in Beijing, company president and CEO, Dr. Heinrich von Pierer said: "Either the situation has to be fixed or we have to find a partner for cooperation. We have to fix, close, or sell."

Financial news service Bloomberg reports that Siemens lost €11 on each phone it sold in the September quarter. The last time the manufacturing division made a profit, it was a meagre one per cent of operating costs. Nokia has an operating margin of closer to 17 per cent, the report continues.

The division's results were hit hard last quarter after handsets had to be removed from shops due to a software glitch. It reported an operating loss of €141m.

Market watchers have speculated that the company is most likely to sell the loss making part of the business to a third party, in exchange for a minority share in the future business. This would be in keeping with its treatment of other divisions, like household goods, personal computers and hydropower turbines, which it now co-owns with others.

Von Pierer said that the company would have a "concept" developed by the 27 January shareholders meeting. Also on 27 January, he will retire from his position as president and CEO, and will take a place on the supervisory board. He will be replaced by Klaus Kleinfeld, currently the company's chief operating officer.®

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