In response to preliminary results showing a lackluster 1998 fiscal year, German electronics group Siemens AG yesterday announced plans to take its semiconductor group onto the stock market as part of its withdrawal from the components business. Chief executive Heinrich von Pierer stopped short of announcing the actual sale of the semiconductor group, though that is clearly the direction in which it is headed. Its CEO explained that Siemens wanted out because the industry is overly cyclical and requires massive capital expenditure, in lean years as in fat ones, and that is not something that is about to change. The other two groups within Siemens’ components division are also earmarked for shedding, with flotation as a possibly prelude. In the case of passive components and electronic tubes, partner Matsushita was cited as part of the solution, suggesting that the latter is to be invited to buy Siemens out of the business. A suitable partner is also being sought for electromechanical components, von Pierer added. In the area of information and communications products, the copper cabling business is to be sold, while both Siemens Nixdorf Informationssysteme and the electronic banking equipment sector are further potential IPO candidates. Though it sold a record one million mobile phones in September, that business area also didn’t meet expectations during the last fiscal year, admitted Siemens’ CEO, without detailing any steps that might be taken to improve performance there. One indication, however, was his remark that the company’s excellent products are not located in the low end of the price range, suggesting that that might be where the company’s efforts will be concentrated for the immediate future. Of course, the ubiquitous Asian crisis was mentioned, requiring as it did provisions of some $540m from Siemens during the year. With the group net profit having climbed just 2% in the last fiscal period, von Pierer had to admit that, though some important progress had been made, the problems overshadowed positive developments during the year. Siemens stock closed up 12.02% at DM113.70 ($68.14) yesterday, a clear response to signs that the board is finally biting the bullet of restructuring. Many questions remain to be answered, however, not least who, if anyone, will want to buy shares in an ailing semiconductor operation, given the current state of that market. The company has already said it is prepared to sell its facility in North Tyneside, in Northeast England (CI No 3,490), to avoid closing it, but as yet has no takers. Three other of its chip plants (in Richmond, VA, Corbeille Essones, in France, and in Taiwan) are joint ventures, respectively with Motorola, IBM and Mosel Vitelic. It will be interesting to see whether they are prepared to buy Siemens out in these units.
