Siemens reviews decision to link up with BenQ

6th June 2005, Comments 0 comments

6 June 2005, MUNICH - The supervisory board of German electrical engineering giant Siemens was expected on Monday to review a possible decision to link up with Taiwanese company BenQ in a bid to revamp Siemens' loss-making cellphone operations.

6 June 2005

MUNICH - The supervisory board of German electrical engineering giant Siemens was expected on Monday to review a possible decision to link up with Taiwanese company BenQ in a bid to revamp Siemens' loss-making cellphone operations.

A company spokesman declined to confirm a Financial Times report that Siemens would join in a partnership with BenQ. But he noted that the supervisory board on Monday would "explore the situation concerning Siemens mobile", the unit in charge of the company's deficit-ridden cellphone operations.

Industry sources believed that details of a decision, if any, would then be forthcoming from Siemens on Tuesday.

Analysts agreed that Siemens must act to revamp its cellphones business, which in fiscal 2004 ran up losses of EUR 280 million.

The losses have continued into the new fiscal year, with the red- ink in the January-March period at EUR 138 million as meanwhile Siemens' world market share in cellphones has dropped to 5.5 percent, from 8 percent a year earlier.

"In principle, this is positive," said Theo Kitz of Bankhaus Merck Finck, about the prospects of Siemens finding help for its cellphone business after the company had appeared to fall silent on the subject in recent weeks.

He said that for analysts, the "crunch" is whether Siemens manages to give up its majority stake in its cellphones business, so that the losses would no longer have to be fully reported in the company's balance sheets.

But a supervisory board member representing worker interests at German electrical engineering concern Siemens demanded on Monday that Siemens should not give up its controlling interest if it comes to a partnership with BenQ.

Wolfgang Mueller, of the metalworkers union IG Metall, told Deutsche Presse-Agentur in Munich that any linkup also should not come at the expense of German employees.

He said Siemens cellphone manufacturing employees had already made major wage and benefits concessions in last year's agreement which averted a transfer of production to Hungary. A deal with BenQ should not now be made at the expense of the employees.

Siemens has some 10,000 workers in its cellphone manufacturing operations, with 6,000 of those in Germany.

Mueller said that Siemens' problems in the cellphone field were due to management mistakes.

"They were asleep when it came to important technological innovations," he said.

Mueller added that Siemens invested too little and set up faulty management structures in its cellphones operations. What remained of its cellphone business the company had undermined further by adding to the negative publicity with public remarks which did not rule out a closure of the cellphone division, he said.

Off the record, top Siemens executives also admit that the company had been slow to recognise new trends in the quickly-changing cellphone field. Also, Siemens' cellphones were plagued by serious software deficiencies in the summer of 2004, badly hurting business.

The Financial Times report said BenQ, which was split off from the Acer concern, is known for having an instinct for new trends and for its market knowledge. About 60 percent of its production, which also includes flat screen monitors and laptops, is for other companies.

DPA

Subject: German news

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