Feeds

Siemens to spin off loss-making phone unit

Handset divison drags down group earnings - again

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

Siemens' troubled mobile phone business once again pulled down the group's quarterly income, making it "difficult to assess" the group's anticipated FY2005 income gain, CEO Klaus Kleinfeld admitted yesterday.

The upshot: the handset unit will be formed into a separate operation, the better to sell or float it off.

Reporting group financial performance for the three months to 31 March 2005, Siemens' second quarter, the company said its net income fell to €781m ($1bn) from €1.21bn ($1.6bn) a year ago, a fall of 35.5 per cent.

Sales, by contrast, rose 4.3 per cent year on year to €18.6bn ($24.1bn).

The mobile phone division lost €138m ($178.5m) during the quarter on the back of a 30 per cent year-on-year fall in sales, to €842m ($1.1bn). Siemens' communications products group, of which the handset unit is a part, lost €19m ($24.6m) as a whole.

Kleinfeld said he will restructure the handset unit as a separate business, declaring he is "positive" he will find partners - buyers, in other words - for the unit. If he finds one, Siemens is "unlikely" to retain a majority share in the operation, Siemens' CFO, Heinz-Joachim Neubuerger, said. The restructure will take place in one to three months' time, Neubuerger added.

Mobile phone sales are slowing around the world, a trend that's hitting Siemens particularly hard. Between Q1 2005 and Q1 2004, the company lost 2.8 percentage points of market share, to 5.4 per cent, according to Strategy Analytics numbers released yesterday. All other major vendors raised their market shares year on year.

Siemens' phone unit has been the subject of sale speculation since late last year, though rumoured acquisition/merger partners, from China's Ningbo Bird to South Korea's LG, have subsequently stated they have no interest in the loss-making German business.

Earlier this year, Kleinfeld, who took over the CEO's post in January, said he was considering either a sale or a spin-off of the mobile phone unit. Then, in March, the group said its strategy was to cut costs at the unit to bring it back to profitability. ®

Related stories

World mobile phone sales slow
Smart phones boom - Symbian up, MS and Palm down
Smart phones make inroads in business
Siemens to cut phone biz costs by 1bn
Siemens outsources IT - to itself
Siemens readies digital TV, VoIP Wi-Fi handsets
Siemens delays decision on handset biz fate
LG rejects interest in Siemens mobile biz

Internet Security Threat Report 2014

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
10 Top Tips For PRs Considering Whether To Phone The Register
You'll Read These And LOL Even Though They're Serious
Stop ROBOT exploitation, cry striking Foxconn workers
HP downturn and automation eroding overtime on China's production lines
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.