DJ Siemens 2Q Earnings Seen Held Back By New Economy
25 Apr 04:12
By Chris Reiter
Of DOW JONES NEWSWIRES
BERLIN (Dow Jones)--Weaker computer-chip and mobile-phone markets will be the
thorn in the side of Germany's Siemens AG (SI) when the engineering and
electronics giant reports second-quarter earnings Thursday.
But strong performances from the power generation and medical solutions
divisions, among other Old Economy standouts, should in part make up for the
expected weakness in these New Economy sectors, said analysts.
"We think big profit improvements at the power generation and medical
divisions will cushion Siemens against adverse developments in Information
Technology spending and mobile phones," said Bankgesellschaft Berlin analyst
Simon Scholes in a research note.
Siemens is expected to show net profit of EUR602.5 million for the quarter
ended March 31, down from the first quarter when the company posted a net
profit of EUR778 million, according to analysts surveyed by Dow Jones
Newswires.
The group reported a second-quarter net profit before extraordinary items of
EUR780 million a year ago, but this year it has switched from German accounting
standards to U.S. Generally Accepted Accounting Principles, making a direct
comparison difficult.
Sales are expected to hit EUR19.9 billion for the period, a rise from EUR18.6
billion a year ago.
Siemens' wireless division, Information and Communications Mobile, is the
biggest uncertainty, with analysts expecting a generally weak performance.
"The (mobile) handset business can't have gone so well," said Merck Finck
analyst Theo Kitz.
Nevertheless, it will probably still have gained market share from rivals
such as Motorola Inc. (MOT) and Telefon AB L.M. Ericsson (ERICY).
The bad news, meanwhile, is already out on semiconductors unit Infineon
Technologies AG (IFX), in which Siemens still holds 71%.
Infineon reported Tuesday that its second-quarter net profit fell toEUR23
million, down a staggering 84% from the EUR146 million it posted a year ago.
Siemens is also unlikely to change its outlook for the rest of the year. The
company recently admitted it would only reach its target of double-digit sales
growth and even higher net profit growth for the year if it excluded Infineon's
numbers.
-By Chris Reiter, Dow Jones Newswires; +49 30 288 8410;
chris.reiter@dowjones.com
(END) DOW JONES NEWS 04-25-01
04:12 AM |
