Siemens Reports Sharp Rise in Q3 Earnings

BERLIN (07/26/2000) - Siemens AG Wednesday reported strong earnings for its fiscal third quarter, ended June 30. Net profit for the quarter stood at 832 million euro (US$780 million), an increase of 134 percent over the same period last year.

Revenue reached 18.8 billion euros, up from 15.8 billion euros in the corresponding period a year ago. Sales from Siemens' German operations increased a modest 5 percent to 4.4 billion euro, from 4.2 billion euro a year ago, while international sales jumped 24 percent, from 11.6 billion euro to 14.4 billion euro.

The positive results were due particularly to the Infineon Technologies AG subsidiary and the Automation and Drives (A&D) and Information and Communication Mobile (ICM) units, the German electronics and engineering giant said in a statement.

Infineon, formerly known as Siemens Semiconductors, became a separately-listed company on April 1. Siemens has since reduced its stake to 71 percent, but as majority shareholder still integrates all of Infineon's results into its own balance sheet.

Siemens' stock lost value after the release of the figures. Its shares were selling at 174.9 euro in mid-day trading Wednesday on the Frankfurt exchange, down 2 percent from the day's opening price of 183.5 euro.

"It's just profit taking, of course; the numbers were very good," said Stefan Denig, a Siemens spokesman.

Denig acknowledged, however, the company has had to revise downward its initial goal of producing 30 million mobile phones this fiscal year, which ends September 30. "Demand is that great that there are some shortages with some components," he said. "But we still plan to reach and even exceed our budget for ICM," the business unit which includes Siemens' wireless communications operations.

Suppliers of chips and other components, including Infineon, are backlogged, a problem Denig said is affecting the entire industry. The component shortages are not expected to last forever. "For next year, we have a target of selling 60 million mobile phones, and we are pretty optimistic about that, because we do have contracts with suppliers," Denig said.

Rival mobile phone supplier L.M. Ericsson Telephone Co. saw its share price drop 11 percent late last week, following a warning by the Stockholm-based company that component shortages would continue to drag down its earnings through the current quarter. [See "UPDATE - Handset Loss Drags Down Ericsson's Q2 Results," July 21.]Siemens, in Munich and Berlin, can be reached at +49-89-636-00 or via the Web at http://www.siemens.de/

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