? Pat, you seem reluctant to say what your theories are in this alliance. Can you be more specific? Please and thank you.
I think the following WSJ article gives the clues we need. Siemens will not be merging but will be creating a new company. How NN fits into this is unclear. Stock getting stronger against the trend.
Pat
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February 10, 1999
Tech Center
Siemens Plans Acquisition
To Boost Internet Strategy
By WILLIAM BOSTON
Staff Reporter of THE WALL STREET JOURNAL
BERLIN -- Siemens AG plans to take another step next month in its catch-up game with U.S. Internet technology firms with an acquisition that it plans to set up as a separate company.
Volker Jung, Siemens's management-board member in charge of communications networks, said the German electronics giant is keenly interested in filling holes in its offering of data-networking products, which guide traffic on the Internet.
"We're going to do something in this area and in Internet access equipment," he said, adding, "It will come to a small investment next month and will also involve forming a new company in the U.S."
Mr. Jung wouldn't elaborate on the company's plans.
Siemens is a leading maker of telephone networks world-wide. But it has been slow in addressing the explosion of the Internet and the increasing importance of Internet technology as a platform for integrating various types of communication.
It has a significant partnership with 3Com Corp. and Newbridge Networks Corp., but has said repeatedly in recent months that it needs to buy data-networking companies to beef up its offering to catch up with firms like Cisco Systems Inc. and offer a full palette of networking products.
But at the same time, Mr. Jung dismissed the huge mergers in the industry as "wasting shareholder money."
'Exorbitant Prices'
"We will not buy anything at these exorbitant prices, but at the same time, we must be flexible," he said. "We prefer teaming and partnerships to megamergers at overblown prices," he said.
The boom in data networking, driven by the rapid expansion of the Internet, took big telecommunications-equipment makers like Siemens and its competitors Lucent Technologies Inc., Northern Telecom Ltd., Telefon AB L.M. Ericsson and Alcatel SA by surprise.
In a move to back into the expanding market, Lucent recently acquired Ascend Communications Inc.
Mr. Jung was speaking at a conference to introduce Siemens's Information & Communications division, or IC, which it formed last year to develop a broad array of products and services that integrate computer technology and telecommunications.
He said he expected restructuring of the division to be more or less completed by 2002. The company has been divesting unprofitable businesses or businesses that can't achieve global leadership. It also is making acquisitions in some areas, such as data networking, where it wants to become a leading participant on the global market.
Barring any worsening of the economic situation in Asia, Russia or South America, Mr. Jung predicted the IC division's sales would rise to as much as 54 billion marks ($31.27 billion) in the year that ends on Sept. 30 from around 47 billion marks last year.
"We want to grow faster than the market, which is growing around 10% a year," he said. Citing industry forecasts, he predicted that the global market for information and communications products and services would be 1.4 trillion euros ($1.586 trillion) in five years.
The sales forecast initially boosted Siemens shares in Frankfurt trading, although they ended the day down 1.6%, falling 1 euro to 61.10 euros each.
New Products
At next month's CeBIT information technology fair, Europe's biggest, which takes place in Hannover, Siemens's IC division said it plans to display products that include a new palmtop device that will be priced below 3Com's popular Palm Pilot, a display of power-line technology that allows voice and data to be transmitted over power lines in a home or office building, and a new low-cost mobile phone.
"Our goal is to become No. 3 in the mobile-phone business," said Mr. Jung, which would put the company behind Nokia and Motorola. "We will invest a lot of money and we'll probably partner with somebody to lower development costs."
The first step to crack the mass market for mobile phones is the launch at CeBIT of its C25 cellular phone, a small phone that lets users "roam" between different cellular networks based on the global system for mobile communications and will cost around 400 marks.
Roland Koch, head of the communications-networks division, said Siemens is determined to break into the U.S. market for mobile phones for UMTS, which is the next generation of digital cellular technology that will facilitate access to the Internet.
It is still too soon to put out products because of battling between European and the U.S. over standards.
"We will heavily fight to be in the U.S. in the third generation," he said.
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