BUSINESSWEEK ONLINE : SEPTEMBER 4, 2000 ISSUE
INTERNATIONAL BUSINESS Time for Siemens' Mobile-Phone Biz to Roam? Siemens may have led the way in spinning off Infineon Technologies, but if investors have their way, Siemens may spin off another prize: its turned-around mobile-phone business. Europe's mobile-phone boom is already boosting the bottom line at Information & Communications Mobile, the Siemens unit that makes mobile handsets and network equipment. In the three months to June 30, the division's earnings before taxes and interest soared 57%, to $174 million, on sales of $1.7 billion, a 49% rise. But such success raises a touchy issue at the Munich electronics conglomerate: Some senior insiders are quietly asking whether a business that moves at Internet speed can coexist with the Old Economy Siemens, the maker of power-generation and transport equipment. Investors are starting to wonder the same thing. They're suggesting that Siemens' telecom units would make a valuable stand-alone company. ''It would be faster and more effective,'' enthuses Daniela Bergdolt, a shareholder activist who watches Siemens closely. BURIED TREASURE? The financial logic is compelling. Schroder SalomonSmithBarney analyst Mark Davies-Jones figures shares in a spun-off mobile-phone venture could be worth $32 billion, compared with Siemens' current market cap of $93 billion. Add in the consulting units and those providing equipment for land-based networks, and the total value of the phone spin-off could rise to $59 billion. Rudi Lamprecht, the 51-year-old chief of the phone division, insists he's happy as a member of the Siemens tribe. With his seat on the parent's management board, he says, he has the freedom he needs to run the business. ''I don't see any tension,'' he says. ''There are no plans'' for a spin-off. Yet that business is unforgiving. Lamprecht brought the unit back from losses in 1998 by boosting efficiency and paying more attention to customer demands. It will sell 25 million handsets this year, up from 13 million last year, and could sell more if it had the capacity. Siemens is still playing catch-up, though. Nokia Corp. dominates the handset market, followed by Ericsson and Motorola. Siemens, with a 5.5% share, is tied for fourth place with Panasonic, Alcatel, and Samsung. Lamprecht plans to join the top three by bundling equipment with software and consulting provided by the fast-growing Siemens Business Services unit. That could work. As mobile charges drop, phone companies will rely on revenue from m-commerce--services offered over the mobile Net. Only Siemens can provide the needed software and expertise, Lamprecht argues. But Siemens has to go into overdrive to challenge Ericsson and Motorola. Acknowledges Lamprecht: ''We are taking market share, but we are not where we want to be.'' Maybe the place he and Siemens mobile need to be is alone. By Jack Ewing in Frankfurt _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Philips: In the Chips TABLE: Philips Semiconductor: To Spin or Not to Spin Time for Siemens' Mobile-Phone Biz to Roam? INTERACT E-Mail to Business Week Online

Copyright 2000-2008, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use   Privacy Notice