Siemens lays out recovery plans

Siemens AG sounded a positive note as it looked back at its completed fiscal year, despite disappointing financial results. The company intends to increase earnings during fiscal 2002, placing top priority on restoring profitability in its troubled Information and Communications area, Siemens President and Chief Executive Officer Heinrich von Pierer said in remarks carried over a live Web broadcast Thursday.

In its fiscal fourth quarter, the electronics and engineering giant lost 1.1 billion euros (US$1 billion as of Sept. 30, the last day of the quarter). The Information and Communications Networks (ICN) division, which was hit hard by reduced investment in the telecommunication sector, is "rapidly implementing its cost reduction and efficiency boosting program," the company said. Similar plans are under way at Information and Communications Mobile (ICM), where Siemens said the mobile phone manufacturing business is close to breaking even.

Von Pierer tried to quell reports that the company has concrete plans to merge its wireless handset business with that of another manufacturer. "I can easily imagine cooperation in this area, above all in UMTS (Universal Mobile Telecommunications System) phones and PDAs (personal digital assistants). We want to reduce costs and shorten development time. Everything else, ladies and gentlemen, is speculation."

In a separate announcement Thursday, Toshiba Corp. said it will end its alliance with Siemens to develop 3G (third-generation) handsets, instead selling its own phones in Europe. The Siemens chief reiterated that he is putting strong pressure on each division of his diverse company to "do their homework" on improving results.

"The motto still applies: Those who don't reach their goals in the long term have no future with Siemens," he said.

His remarks came a day after Siemens announced that it had reduced its stake in its money-losing semiconductor manufacturing spin-off Infineon Technologies AG to less than 50 percent by selling some shares and placing others in an irrevocable trust, so that Infineon will no longer be consolidated in Siemens' financial reports. Von Pierer went on to restate Siemens' fiscal 2001 results, which were more positive without incorporating Infineon's losses.

"So now Infineon has moved a good bit farther away from the mother company Siemens," he said, but added, "That won't stop the capital markets from continuing to treat Infineon shares as part of the 'Siemens family.'"Von Pierer declined to state revenue or profit targets for fiscal 2002, already under way for more than two months.

"The uncertainties about future economic development have grown since the (terrorist) attacks of Sept. 11, and no one knows exactly when, in particular, there will be a turnaround in the information and communication sector. Please understand that therefore no exact prognosis for the fiscal year is possible at this point," he said.

An archived Webcast of von Pierer's remarks will be available, starting early Thursday afternoon Central European Time, at http://www.siemens.de/pressekonferenz/.

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