Siemens fixed-line telecoms unit wary about market
Thu February 12, 2004 07:14 AM ET
(Wraps in CEO on pricing pressure, adds industry background)
By Hans Nagl
reuters.com
ATHENS, Feb 12 (Reuters) - The fixed-line telecoms unit of German industrial conglomerate Siemens AG (SIEGn.DE: Quote, Profile, Research) on Thursday poured cold water on some rivals' optimistic outlook for this year, saying that it still saw no sweeping market upturn.
The head of Siemens' ICN unit, which makes network gear for phone carriers including Deutsche Telekom and France Telecom, said he expected stable sales this year but stopped short of the growth forecasts of rivals Alcatel (CGEP.PA: Quote, Profile, Research) and Nortel (NT.TO: Quote, Profile, Research) .
"I don't like it that some in our industry are already calling everything shiny happy again," ICN's Thomas Ganswindt told journalists in Athens.
Telecoms equipment makers, including the top trio Siemens ICN, Lucent (LU.N: Quote, Profile, Research) of the United States and France's Alcatel, suffered when heavily indebted phone carriers more than halved their spending since 2000 to reduce debt.
Alcatel and Nortel said in recent weeks they saw fixed-line equipment sales growing again this year. Like Siemens, Lucent said last month it saw sales stabilising but remained cautious on growth.
Siemens said that, while unit sales were already going up, pricing pressure was now so intense that it offset that effect. Prices would fall 10 to 20 percent this year, including the effect of the rising euro against the dollar.
"We assume that we will have stable sales," Ganswindt said, asked about the current business year to September. While the worst was over, the market was still difficult and stagnating.
ICN's book-to-bill ratio was currently greater than one, Ganswindt said, which means that it is taking in more new orders than it is shipping.
Ganswindt reiterated the unit would post quarterly and full-year operating profits, after an operating loss of 366 million euros ($464 million) in the last business year.
Siemens has set the unit a margin target of eight to 10 percent but indefinitely delayed the goal in the face of the telecoms crisis. Ganswindt said it would take time to reach the goal, without specifying the timeframe.
ICN has slashed 20,000 jobs to counter the crisis, more than a third of its payroll. Ganswindt said he saw currently no need to expand the workforce again.
Shares in Siemens traded up 0.1 percent at 67.91 euros by 1114 GMT, underperforming the German blue-chip index DAX (.GDAXI: Quote, Profile, Research) .
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