Siemens Handset Unit
"We will develop a concept by Jan. 27, (the date of the annual shareholders' meeting), Either the situation has to be fixed or we have to find a partner for cooperation. We have to fix, close, or sell." - Dr. Heinrich von Pierer, Siemens outgoing CEO -
Laatest Bloomberg article (January 6, 05:08 EST) titled "Siemens Mobile Partner Choices Narrow as Bird Rules Out Linkup" states:
Siemens AG, the world's fourth-largest mobile-phone producer, may struggle to find a partner for its unprofitable handset business after Chinese manufacturer Ningbo Bird Co. Ltd. ruled out a joint venture.
Interesting side-note:
Ningbo Bird's inventory of unsold handsets rose to 2.2 billion yuan ($266 million) worth at the end of 2004, from 1.3 billion a year earlier, according to BDA China.
>> Siemens to Present Plan for Handset Unit This Month
Bloomberg
January 6, 2005
Updated 03:03 EST
Siemens AG, the world's fourth-largest maker of mobile phones, will deliver a proposal on the fate of its unprofitable mobile-phone business by the end of the month, Siemens Chief Executive Heinrich von Pierer said.
"We will develop a concept by Jan. 27," the date of the annual shareholders' meeting, von Pierer said at a press briefing in Beijing. "`Either the situation has to be fixed or we have to find a partner for cooperation. We have to fix, close, or sell."
Von Pierer declined to comment on reports that Siemens may sell the handset business to Chinese partner Ningbo Bird Co. The German company is working to improve its partnership with China's biggest mobile-phone maker after missing a target to return the handset unit to profit in the fiscal fourth quarter, he said on Nov. 18. Both companies have denied holding talks on a sale.
"It's highly possible that Ningbo Bird may want to buy Siemens' handset business," said Edward Yu, chief executive of Analysys Consulting, a Beijing-based technology research company. "Bird has a strong distribution network in China, while Siemens has strong technology."
Siemens and Ningbo Bird signed an agreement in June to sell the German company's phones through Bird's 30,000 retail outlets. China is the world's biggest mobile-phone market, with 313 million subscribers at the end of November, more than the U.S. population.
Mobile Losses
Siemens' mobile-phone unit had an operating loss of 141 million euros ($183 million) in the quarter through September after some its 65 series phones were temporarily removed from European shops because of a software glitch. The company wants to increase the number of phones it produces in China to 18 million to 20 million a year from 14 million currently, von Pierer said in Bangkok in November.
"At the moment we are not considering forming a production venture with Siemens," Ying Weidong, an executive at Ningbo Bird's public relations department, said in a Jan. 5 phone interview. "We haven't been approached by Siemens about this either."
Munich-based Siemens, which said in May it will invest 1 billion euros in China in the next few years, competes with Motorola Inc. and Nokia Oyj as well as Chinese manufacturers such as TCL Corp. in selling handsets. Germany's biggest engineering company is also counting on contracts for phone network equipment, power generators and high-speed trains to help reach a goal of more than doubling China sales in three to five years.
China Sales
Siemens' China sales rose 28 percent in fiscal 2004 to 38.4 billion yuan ($4.6 billion), with new orders climbing 34 percent to 41.8 billion yuan, von Pierer said. He declined to disclose profit.
"Overall, we gained market share in China and proved that we can win against both the global and local competition," von Pierer said. Growth "did not come at the expense of the sound profitability of our operations."
A decision to sell the handset business or form a production venture in China would reflect a trend of technology manufacturing moving to Asia, where labor costs are cheaper. Lenovo Group Ltd., China's biggest computer maker, last month agreed to buy International Business Machines Corp.'s loss-making personal computer business for $1.25 billion. TCL, China's biggest public traded consumer electronics maker, formed a venture with Thomson SA last year to create the world's biggest television maker.
Siemens' management and supervisory boards will decide the fate of the handset business sometime later this year, von Pierer said.
Mobile Competition
Linking with a foreign technology partner such as Siemens would help Ningbo Bird develop more sophisticated handsets as China prepares to introduce high-speed services that let users download video clips and surf the Internet, Analysys's Yu said.
"Ningbo Bird and other Chinese handset makers are having problems competing against the mega-pixel technology of handset leaders like Nokia, Motorola" and Samsung Electronics Co., said Duncan Clark, managing director of BDA China Ltd., a Beijing-based telecommunications market researcher.
Ningbo Bird may not be able to afford to buy the Siemens unit, Clark said. The Chinese company's inventory of unsold handsets rose to 2.2 billion yuan ($266 million) worth at the end of 2004, from 1.3 billion a year earlier, according to BDA China.
Siemens also has a partnership with Huawei Technologies Co., China's biggest phone-equipment maker. The companies jointly invested $100 million to start a third-generation mobile-phone network in China, according to a Nov. 26 release. Huawei received a $10 billion credit line from China Development Bank last week.
"We have no plans to buy Siemens' handset business," said Hu Yong, Huawei's executive vice president of marketing. <<
- Eric - |
