Siemens Fiscal 1999 EPS Doubles on Demand for
Semiconductors, Cell Phones
By Sonja Heizmann
Siemens Sees Gains From Focusing on Fast-Growth Units
(Update2)
(Adds plan for U.S. listing, information throughout.)
Munich, Dec. 2 (Bloomberg) -- Siemens AG, a German maker of
products ranging from light bulbs to power plants, said fiscal
2000 profit will beat last year's 3.64 billion deutsche marks
($1.88 billion) as it focuses on Internet access equipment, mobile
phones and other fast-growing businesses.
Highlighting the new direction the company is taking, Siemens
said sales from its Internet and data networking business will
rise more than 50 percent to 4 billion marks.
Siemens expects higher profit even though it's shedding cable
operations and other low-growth assets that account for 15 percent
of sales. The divestments, part of Chief Executive Heinrich von
Pierer's plan to make the German company more competitive, will
reduce sales by about 12 billion deutsche marks fiscal 2000.
``Siemens has focused on sales in the past, with disastrous
results,' said James Stettler, an analyst at Dresdner Kleinwort
Benson, who has a ``buy' rating on the shares. ``They're really
moving away from being an old-fashioned manufacturer. Siemens
now
needs a vision.'
Siemens shares rose 4 euros, or 4 percent, to 103.3 euros,
after climbing as much as 5 percent earlier. They gained 87
percent this year as investors applauded the company's
reorganization. In comparison, Germany's DAX index rose 18
percent. Siemens now plans to list shares on the New York stock
exchange in the first quarter of 2001.
Sales and new orders in fiscal 2000 will grow less than 10
percent with net income growth being ``well above' sales gains.
Siemens said it expects an extraordinary gain after taxes of
more than 3 billion marks in fiscal 2000 from the unit sales,
though the exact figure will depend the initial public offering of
its Infineon semiconductor unit early next year. It will use the
proceeds for acquisitions to strengthen its Internet technology
and process automation operations, Siemens said. It also may buy
back shares.
``We are confident about fiscal 2000,' von Pierer said.
``Declines in our business volume due to consolidation effects
should be offset by organic growth.'
Acquisitions
By the middle of next year, Siemens will have sold units with
annual sales of about 35 billion marks, according to analysts at
Oppenheim Finanzanalyse, raising an estimated 40 billion marks to
invest in other businesses.
Still, analysts say the company will have to focus further to
compete better with rivals, such as Royal Philips Electronics NV.
Siemens doesn't rule out the sale of other business that weren't
part of the initial reorganization plan and will seek further
alliances, von Pierer said today.
The company, which reported 1999 net income last month, also
said fiscal 1999 earnings per share calculated according to DVFA
German accounting standards doubled to 2.63 euros from 1.38 a
year
earlier, boosted by a rebound in its mobile phone and
semiconductor businesses.
Commenting on units that posted an operating loss in fiscal
1999, von Pierer said the transportation systems are expected to
turn to profit this fiscal year. Von Pierer said he can't give an
outlook for the KWU energy generation unit, where the loss widened
in fiscal in 1999 because of technical problems with gas turbines
that led to a delay in power plant delivery.
Pretax earnings rose 63 percent to 5.6 billion marks in the
year ended in September while earnings before interest and tax
rose 82 percent to 5.8 billion marks. Siemens repeated that sales
rose 14 percent to 134.1 billion marks.
Siemens said cash flow in fiscal 1999 was positive for the
first time in four years at 2.1 billion marks. It will pay a
dividend of 1 euro, up from 0.77 euro a year earlier.
Partnerships
Responding to speculation Siemens and Japan's Toshiba Corp.
will merge their medical engineering businesses, von Pierer said
the two companies have been in a partnership for 10 years and ``it
is only natural that we also talk to our partner about how we
might further expand our existing cooperation.'
He said their talks indicate ``there may be possibilities for
such expansion' while a joint venture for the two companies'
medical engineering units is ``pure speculation.'
Siemens is also considering alliances in its transportation
systems business and a closer partnership with Bombardier Inc., a
Canadian aerospace and transportation company.
``Exploratory talks, however, have indicated that the time
isn't ripe for such a move,' von Pierer said.
Siemens and Framatome SA, France's state-controlled reactor
maker, aiming at intensifying their cooperation, von Pierer said
adding that they might form a joint venture. Last month
Framatome's deputy managing director for energy, Jean-Daniel
Levi,
said Framatome and Siemens are close to an agreement linking
their
nuclear power businesses. The companies are still discussing
details of a joint venture with sales of about $2.3 billion, he
added.
Von Pierer rejected speculation Siemens plans to sell its
automotive systems unit. ``Siemens Automotive Systems is not for
sale,' he said. The company is currently working with Merrill
Lynch & Co. on a ``forward-oriented strategy' for the business,
von Pierer said. |
