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November 11, 1994

STILL BLEEDING RED INK, SIEMENS NIXDORF SETS OUT ITS STALL AS A GLOBAL COMPANY

By CBR Staff Writer

Siemens Nixdorf Informationssysteme AG reported its third consecutive reduction in losses yesterday and said next year would see the company back in the black. Gerard Schulmeyer, chief executive of since November 1, pointed to an organisation not on the brink of financial disaster, as he presented results for the year to September 30. The Siemens AG subsidiary had losses of $233.7m, down from $279.8m last year. Indeed, Schulmeyer promised that in next year’s figures, excluding restructuring charges that will run to hundreds of millions of dollars, operating profit will be written in black. Turnover fell 1.7% to $7,813m but the second half of 1994 was up 23% in revenues on the same period last year and up 19% in orders on the first half of 1994. In an overcrowded marketplace Schulmeyer said he was well aware that standing still took a 14% increase in productivity and that that still was not enough. In the year reported, price erosion hit Siemens Nixdorf by around $600m and this he expected will increase in the next 12 months. Overheads had to be cut further and work force numbers would continue to drop. Siemens Nixdorf current workforce of 39,000 is 4.1% down on last year and 24% drop since 1991. Schulmeyer said numbers would fall by another 2,000 this year if the company was to become flexible enough to react to rapid market changes. This flexibility meant a new personal computer every six months, a new Unix line every two years, and similar creativity in the mainframe, services and applications businesses, and improving the current 196 days from personal computer order to bill to 10 days. It says sales of personal computers grew more than 50% in the year to September and that financially, the division was no longer a headache, scoring a share of the German market at 10.4% at the end of quarter. Make acquisitions As a German-centric company, Siemens Nixdorf could not become a major league player: Schulmeyer is committed to expanding operations in the US and Asia through a series of strong alliances. I will not exclude that we will make acquisitions, he said. His ultimate aim was that business be divided equally between Germany, Europe and the rest of the world as was already the case in high speed printers. Some $30m had been budgeted to expand its presence in the US and it recently opened an application laboratory in the US to speed up conversion of software applications onto the Siemens Nixdorf flavour of Unix. Another $13m has been budgeted for Asia. The decision to make English the company’s working language is an attempt to ensure that not only customers but employees perceive it as a global one. Schulmeyer is to embark upon an ambitious change of company culture that will couple Silicon Valley entrepeneurial fizz with Siemens Nixdorf’s large project perfectionism. As he put it, We have to learn to experiment again. This process, he admitted, normally takes between three and five years but Siemens Nixdorf did not have that kind of time with which to play. He expected customers to see a difference in how Siemens Nixdorf did business within a year and was drafting in people who had helped companies like Xerox Corp and Citibank, to effect this. He thought that many of the company’s problems lay not in the technology but in getting the message out.

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