SIEMENS FOR SALE? Why a company would put itself for sale knowing that their customer would stop considering is product stratight away?
Only because Siemens wants to cash in the chips before it becomes public knowledge that the mobile business is drying up in one year or two!!!
The mobile business reached saturation level.
It is a cyclical business and the business cycle is just about to end. Siemens knows that and want to dowload mobile unit. Lucent knew that and sold to Alcatel.
Perhaps it will end up like this:
Motorola and Alcatel/Lucent in America. Nokia and Ericsson in Europe and the rest of the world split among them
We may have some 5 years of build out with cut throat competition: Bangladesh, India, Iran, Swazilandia, Zambia…
SIEMENS FOR SALE? And more consolidation among the big boys may be on the way. For example, BusinessWeek Online has learned that Siemens (SI) is actively shopping what is left of its communications division.
It has already sold off a mobile phone business to Taiwan-based BenQ Corporation. One source says Siemens has been working with consultants from Booz-Allen on its strategic alternatives. While the company has hinted it wanted to keep promising pieces of the business, sources say it is now leaning towards selling off all of the $16.1 billion business -- most likely in chunks, since it's unlikely to find a buyer for the whole thing. Siemens says talk of the sale is speculation.
By buying Lucent, Alcatel solidified its position in high-end phone switches, particularly in the U.S. As a result, "Siemens has to decide whether to get bigger or smaller -- and the proponents of getting smaller are winning," says one industry insider who has been approached about buying parts of the unit.
Analysts say Siemens, like Nortel, has struggled to maintain leadership in the most important markets. The Munich-based giant recently saw Deutsche Telecom (DTE) grant a big contract to deliver Net-based TV services to Paris-based Alcatel, for example.
INTERESTED PARTIES. Who might the buyers be? Insiders say big wireless players such as Ericsson (ERICY) or Motorola (MOT) might want the Siemens unit that sells basic phone switches to phone companies. So might Cisco, though the company says it has no plans for another merger along the lines of Scientific Atlanta.
Others, including Avaya (AV), might want the Siemens unit that sells to corporations. If that doesn't pan out, there may be other options. "I've heard of some private equity interest" in some or all of the Siemens units, says Tom Nolle, president of consulting firm CIMI Corp.
However Siemens and the other established players fare, there's no shortage of entrepreneurs stepping up with dreams of becoming the Old Guard of tomorrow.
Jean-Charles Doineau, a Paris-based analyst for Ovum PLC, said a possible European acquisition prospect would be the communications group of Germany's Siemens AG, but it partners with other suppliers to provide complete telecom packages.
"If you buy Siemens, you buy the relationship and the customer base, but there are far less technology assets" than other large vendors have, Doineau said.
However, there's speculation Nokia is considering the Siemens unit that makes mobile network equipment, Doineau said. Siemens has already sold its cell-phone business to BenQ Corp., a Taiwanese company.
That leaves smaller companies on the list of possible acquisition targets.
"I think a Cisco acquisition of somebody is a possibility, a Nokia acquisition is possible, but they may not go after someone the size of Nortel," Yankee Group's Maynard said.
There's a second tier of telecom equipment suppliers that have billions in annual revenue but don't have the breadth of the giants. The larger companies could pick up one of these to fill a technological or geographical gap, Maynard said.
Shares of Tellabs Inc., a Naperville, Ill., maker of digital connection gear, are up almost 12 percent since Alcatel and Lucent revealed they were in merger talks on April 24. Shares of Ciena Corp., a Linthicum, Md., maker of fiber-optic equipment, are up 8 percent.
Juniper Networks Inc. of Sunnyvale, Calif., has also been mentioned as a takeover candidate. Its shares jumped on the merger news, but have since lost those gains. Prudential analyst Inder Singh wrote in a research report that the combined Alcatel-Lucent company would likely cut back on buying routers from Juniper in favor of Alcatel's competing product.
Schnee believes the stock market is overestimating the deal's effect on the attractiveness of smaller companies. It's more significant, he said, when the large carriers show interest in using a small company's technology.
If AT&T or Verizon Communications Inc. says there's a small vendor it takes seriously, Schnee said, `people have to start looking at them." In his opinion, that's what makes a company attractive, rather than mega-mergers in the industry. |
