Siemens Ends On A Whimper
Siemens ends on a whimper – at Moneyweek.co.uk - the best of the week's international financial media.
Siemens' quest for profitability in its mobile phone business has "ended with a whimper rather than a bang", says Lex in the FT. The German group is to sell its phones unit to Taiwanese manufacturer BenQ in an exit that will cost Siemens 350m euro, including the 50m euro it will spend to claim a largely symbolic stake of just 2.5% in BenQ.
Siemens is in fact lucky to have found a buyer at all, says Marianne Brun-Rovet on Breakingviews.com. Most of the potential Asian buyers had shied away from the offer. That's not too surprising: the mobile unit suffered a 500m euro loss in the past year, and restructuring alone could have cost Siemens up to 300m euro in 2005. Closing the unit down would have set Siemens back by nearly 1bn euro. The good news for Siemens is it can now "shift the unsavoury burden" of having to work with its costly German employees: this will now become BenQ's responsibility. And the step finally gives real credibility to Siemens' recovery story now the group needs to follow this up with "decisive action on the loss-making business services division".
The bigger question could just be how much the deal is likely to accelerate the shift in global handsets towards cheaper Asian manufacturers, says Lex in the FT. BenQ may still need to boost the sales of Siemens handsets significantly and swiftly, which could make things "tough" over the next couple of years. Yet permission to now stick "BenQ Siemens" on the handsets for the next five years will certainly help.
Moreover, the Taiwanese group could just be right when it says that wireless components have become more vital in its other consumer electronic devices. It would be rather ironic, though, says Lex, if the Taiwanese group succeeds where the German one failed.