MUNICH, Germany—Siemens AG announced plans to cut about 1,000 jobs in Germany from its largest division, Communications. The wireless and wireline telecommunications equipment unit has struggled to rake in profits in the face of biting competition that has forced equipment vendors to lower their prices.
During the first half of fiscal 2006, Siemens laid off 1,500 employees. The latest reduction in work force amounts to approximately 2 percent of Com’s 54,500 employees.
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In all, Siemens employs about 470,000 people, having cut more than 7,000 positions since Klaus Kleinfeld signed on as chief executive officer of the company 15 months ago.
Last year, Siemens sold its money-losing mobile-phone unit to BenQ Corp. of Taiwan. Recently, a German newspaper reported that Motorola Inc. was looking at buying Siemens’ Communications unit. Siemens said the unit’s second-quarter group profit is $34 million from orders worth $4.256 billion and sales of $4.483 billion. Siemens noted that Com’s Carrier Networks business delivered most of the group’s sales growth year-over-year, “as pricing pressure and shifts in sales mix resulted in flat sales in the Enterprise Networks business and a decline in sales in the Devices business.”
Companywide, Siemens reported fiscal second-quarter net income of $1.11 billion, up 14 percent from its $982 million a year ago, but the company warned that it expects a slowdown in sales and increased restructuring costs during the second half of the fiscal year.
The company’s orders jumped 22 percent year-over-year to $30.7 billion, and sales climbed 21 percent to $27.04 billion during the same period.
“Looking ahead, we anticipate that volume growth will even out somewhat compared to the rapid pace of the first half, and that severance programs already in place in the I&C Groups will result in further charges in the second half,” stated Kleinfeld. “Overall, we continue to focus all our efforts on achieving our 2007 targets.”
Though the earnings report was generally strong, Wall Street wasn’t impressed as the company’s stock traded down $2.62 at $94.69 per share during morning trading.
