For the second quarter ending March 31, the Munich, Germany-based company posted net income down 35% at 781m euros ($1.01bn), or 88 euro cents ($1.14) a share, in the January-March period, compared to 1.21bn euros ($1.57bn), or 1.36 euros ($1.76) a share, a year ago.
Despite the smaller second-quarter profit, revenue rose to 18.56bn euros ($24.06bn) from 17.79bn euros ($23.06bn) a year ago.
The company also warned that it might fall short of its goal of increased full-year profit. For fiscal 2005 as a whole, we thought we could achieve – under certain conditions – another slight rise in earnings, chief executive Klaus Kleinfeld told a news conference. Today, this is difficult to assess. The news sent the company’s shares down 1.2% to $73.82 on the New York Stock Exchange, as of 4.20pm BST on Wednesday.
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 the unit 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. For the three months from January to March, the mobile unit dragged earnings down, losing 138m euros ($179m) during the quarter.
This has prompted the company to confirm market speculation that it looking to offload the unit. On Wednesday Siemens revealed it plans to spin off the mobile phones unit from the broader communications group.
CFO Heinz-Joachim Neuberger said the company would sell a majority stake in the unit. It is unlikely that we will keep a majority stake, he said. The company also confirmed it is in talks with potential buyers, but didn’t name them.
Siemens handsets have been struggling to compete against a re-invigorated Nokia Corp, and the unit has now dropped down to sixth place among mobile phone makers behind Sony Ericsson over the past two quarters.
