In an article on Saturday, German daily Sueddeutsche Zeitung cited sources that said the German engineering conglomerate is in talks with Acer and other interested parties concerning its mobile phones unit.
However, this was denied by Acer on Monday in a statement, and a spokesperson said there had not been any contact between the two outfits.
Siemens is in the process of deciding what to do with its mobile phone division. Options include a sale, restructuring, closure, or a tie-up with another partner. Another weekend report in the weekly magazine Der Spiegel also said the German group is in talks over a possible partnership with Canadian telecoms and networking vendor Nortel Networks.
Siemens has been touting the ailing handset unit to interest parties for a while now. In January it announced that it had a clear roadmap to get the mobile phone unit out of the red, but in the past couple of months it has been linked with a number of outfits including two Chinese companies: mobile phone maker Ningbo Bird, and telecoms equipment maker ZTE.
In February, Siemens denied a claim in the Sunday Times that Siemens was prepared to offer a sum equal to the cost of closing the unit. Indeed, Siemens claimed that the report suggesting it would offer a 500m euro ($652.9m) dowry to any company prepared to take over its mobile handset division belonged in the realm of fantasy.
What is not fantasy is that the cost of making mobile phones in Germany is hurting the conglomerate. In its first quarter to March 31, it made an operating loss if 143m euros ($185.9m) on sales 21.2% lower at 1.17bn euros ($1.5bn). Even during the holiday season, Siemens’ unit sales fell 11.2% to 13.5 million, and the average selling price fell 12.2% to 86 euros ($111.8).
Labor costs are high in Germany. With unemployment at about 5 million, a company such as Siemens is torn between its obligations to its shareholders and that of the wider community.
Most handset manufacturers copy the PC manufacturers and outsource manufacturing to the Far East. The exception here is Nokia, which has kept the manufacture of its high-end units in Finland. Though Siemens is the world’s fifth-largest handset producer with about 7% of the market, its high cost base has left it ill-equipped to compete with fast-expanding Asian producers.
Siemens’ chairman and CEO Klaus Kleinfeld is expected to report on his plans for both the fixed and mobile telephone businesses at a supervisory board meeting on Tuesday. The group is also expected to publicly outline the future of its struggling telecommunications division when it presents its half-year results on Wednesday.
Meanwhile, Motorola is reportedly considering an investment in Siemens’ mobile phone unit. Several publications (in Germany) reported over the weekend that Siemens and Motorola are close to an agreement for Motorola to take a stake in the mobile handset maker.
