Siemens result beats expectations as semiconductor unit romps home
Siemens, 28/7/00:
SIEMENS AG, the German engineering and electronics giant, and its listed semiconductor unit Infineon Technologies AG beat fiscal third-quarter earnings expectations as demand for memory chips swelled Infineon's profit.
Siemens's third-quarter profit climbed to 832 million euros ($US 781 million) from 356 million euros in the year-earlier quarter, as sales rose 19 per cent to 18.8 billion euros from 15.8 billion euros.
Analysts had expected net income of between 700 million and 800 million euros. Infineon, which Siemens partially floated in April, saw third-quarter profit jump to 266 million euros from 31 million euros a year ago. The chip maker's sales rose 67 per cent to 1.83 billion euros from the year-earlier period, and 19 per cent over the second quarter.
A turnaround in Infineon's memory-chip business was the key to the quarter. A loss-maker a year ago, the business had 289 million euros in pretax profit. Siemens's information and communications unit and its medical-systems division also showed strong growth.
All divisions, even perennial loss-makers such as rail transportation, were profitable for the first time in years. Siemens said the better-than-expected third quarter prompted it to raise its outlook for the fiscal year ending September 30.
While fourth-quarter profit growth isn't likely to be above 100 per cent, the company said it "continues to expect a positive earnings trend" in the final quarter.
Spokesman Eberhard Posner said Siemens is "comfortable" with analysts' expectations of three billion euros profit, after 1.87 billion euros in fiscal 1999. But the company said that because of component shortages it would fall short of its goal of selling 30 million mobile phones in the current fiscal year.
It still aims to double its output to 60 million phones in the next fiscal year. Infineon, the world's 10th-largest chip maker and a key supplier for Siemens phones, said it expects fourth-quarter results to be above those of the third quarter and said sales in 2000 and 2001 would be above the industry average of about 20 per cent.
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