Siemens AG announced it will spin out its ailing mobile-phone operation as a “separate legal unit” and said it will probably not keep a majority stake in the business. The news comes as Siemens posted a 35-percent drop in its second-quarter net profit, partially on the failures of its mobile phone and IT operations.
Siemens failed to give specifics on its mobile-phone plans, however. The company said it could reach a “solution with one or more partners along the value chain” for its mobile-phone business as part of the spin out. Such an agreement could involve a partnership with the likes of Motorola Inc., Acer, Nortel Networks Ltd. or one of dozens of other electronics players across the globe. Interestingly, Siemens also promised that its mobile-phone brand would endure.
“The Siemens mobile-phone brand is also clearly a value,” said Klaus Kleinfeld, Siemens’ president and chief executive officer. “Today, we can guarantee our customer that mobile phones will continue to be marketed under the Siemens name. All our options clearly entail this.”
Siemens promised continued cost cutting in the mobile-phone business as well as aggressive product introductions.
“We are left guessing-as we have been in the past four months-on how Siemens wants to achieve the turnaround,” said Henning Dransfeld, research director at consulting firm Ovum. “For the moment, no news is not good news.”
Siemens posted a companywide net income of $1.01 billion, lower than its results in the same quarter last year. Siemens said it benefited last year from a boost from its sale of Infineon shares plus a related tax benefit. Siemens posted a 4.3 percent rise in revenues in the second quarter to $24 billion.
In its ailing mobile-phone business, Siemens reported a loss of $179 million. The company sold 9.3 million phones in the quarter, putting it far below rival LG Electronics Co. Ltd. LG sold 11.1 million phones in the quarter, giving it the No. 4 slot in terms of worldwide market share.
