Siemens AG announced it would implement an aggressive cost-cutting effort to reinvigorate its mobile-phone business, a move that coincides with the company’s plan to initiate a product offensive with 15 new phones this year.
Siemens’ announcement comes as relatively little surprise. Industry for months has seen rampant speculation on the future of Siemens’ loss-making phone business. Siemens itself has been relatively tight-lipped about the situation, promising only that it is considering a variety of options including a restructuring, joint venture, sale or-barring all else-a shutdown.
Siemens cost-cutting announcement indicates the company has largely failed to find a company with which to partner or sell the business.
Under its cost-cutting plans, Siemens said it will institute a “triple-digit million program” to reduce its expenses and improve the business’ cash position. In addition, Siemens said it will win back lost ground in the world market with a product offensive totaling 15 new phone models, including W-CDMA phones. Siemens recently lost the No. 4 worldwide market share slot to rising star LG Electronics Co. Ltd.
Such cost-cutting moves could include a retreat from the U.S. mobile-phone market. The company recently cut around 74 positions in its U.S. mobile-phone operations, leaving just a handful of workers and phones to sell.
“Most business activities are doing well; measures have been instituted for problem areas,” said Lothar Pauly, chief executive officer of Siemens’ Communications division, which includes both wireless and wireline operations. Six of Siemens’ Communications’ business are profitable, but the company’s wireline and mobile-phone business are struggling.
