The Euros are coming! The Euros are coming! In a Trojan Horse!
>>>Motorola Deal Could Be Trojan Horse
For Siemens' U.S. Marketing Strategy
By ALFRED KUEPPERS
Staff Reporter of THE WALL STREET JOURNAL
October 2, 2001
FRANKFURT -- A joint venture between Siemens AG and Motorola Inc. would mark a major extension of the German company's growing presence in the U.S. market. Though a major player in areas such as power generation and medical equipment, Siemens is not well known among buyers of consumer products such as mobile phones.
Analysts say that Motorola's strong presence in the U.S. mobile-phone market makes the possibility of a joint venture in this area an exciting one for Siemens.
"In order for Siemens to really enter the U.S. market on its own, it would have to pay millions in marketing costs," said Jochen Klusmann, an analyst with Bank Julius Baer AG. "Working together with Motorola would allow it to save this money, since Motorola is obviously a household name."
Siemens again declined to comment on the talks between the two companies, reported in Monday's edition of The Wall Street Journal Europe.
In recent years, the electronics and engineering giant has made a major push into the U.S. market, now its largest in terms of sales. The company listed its American depositary receipts on the New York Stock Exchange last March, and has made a series of acquisitions there. The largest was its 1998 $1.2 billion (1.32 billion euros) purchase of Westinghouse power generation. Demand for gas turbines has grown as a result of the recent U.S. energy crisis, making this purchase a major success.
Acquisitions in the tech area thus far have failed to meet initial expectations. In February Siemens purchased Efficient Networks, a maker of data-switching networks, only to see the company post a 74 million euro pretax loss for the company's third quarter through June 30. An effort to purchase a $72 million stake in the business software maker Quintus Corp. collapsed last year.
Though details remain unclear, any type of joint venture with Motorola in either wireless infrastructure or handsets would suddenly turn Siemens into a major player in the U.S. market.
"Motorola is a U.S. icon. Working with them is certainly good for Siemens, but at the same time it's somewhat difficult for me to imagine a big name like that giving up some control," said Michael Bahlmann, an analyst with M.M. Warburg & Co. "I can imagine difficulties with Motorola's U.S. shareholders."
In some areas a merger could benefit both companies. For example, different transmission technologies currently in use in Europe and North America mean that neither company has a significant mobile infrastructure presence on each other's continents.
Still, analysts aren't heartened by French company Alcatel SA's failed purchase of Lucent Technologies Inc. earlier this year. However, they caution against equating French and German companies.
"In the past, with DaimlerChrysler for example, the Germans came in with this attitude that 'We are the only ones with a plan," " Mr. Klusmann said. "But here I can imagine Siemens acting as a type of junior partner in the handset area. They certainly have a lot of respect for Motorola and its past profitability."
Both Motorola and Siemens posted losses in their mobile-phone units in the quarter through June 30. An ABN Amro report issued Monday stated that Siemens is losing 31 euros per handset sold, while Motorola is losing 19 euros.
Industry-wide difficulties have led to a wave of consolidations and partnerships. For example, Japan's Sony Corp. and Sweden's Telefon AB L.M. Ericsson have created a joint venture for handset production.
Siemens already has partnerships in next-generation mobile Internet data transmission in place with two Japanese firms. It develops transmission technology with NEC Corp. and next-generation phones with Toshiba Corp. <<<<< |
