First-quarter profit at German electronics giant Siemens soared 38% on strong performance from its automation, medical and car automotive units. But the mobile phone unit, which is rumored to be up for sale, posted its third consecutive quarterly loss.
First-quarter profit at German electronics giant Siemens soared 38% on strong performance from its automation, medical and car automotive units. But the mobile phone unit, which is rumored to be up for sale, posted its third consecutive quarterly loss.
Net income for the quarter increased to €1 billion ($1.36 billion as of December 31, 2004 the last day of the period being reported), compared to €726 million in the same period the year before, the Munich-based manufacturer said Thursday.
Group sales for the quarter dipped 1%, to €18.2 billion, from €18.3 billion year-over-year, Siemens said.
Sales from the group’s mobile phone unit dropped to €1.17 billion from €1.5 billion year-over-year. The unit posted a loss of €143 million in the first quarter, compared to a profit of €64 million the year before.
Siemens sold fewer mobile phones during the crucial holiday shopping season, down to 13.5 million handsets from 15.2 million in the prior-year period, it said. The average selling price also declined year-over-year, from €98 to €86.
The first-quarter loss follows a loss in the fourth quarter of €141 million. Siemens attributed that loss to competition from lower priced handsets and quality problems that delayed the rollout of the company’s new 65 series of mobile phones.
The fate of the mobile phone unit still hangs in the air after Siemens executives declined to announce a decision during a telephone conference with analysts and at its annual general meeting early Monday.
“There was a lot of speculation that we would present a concrete solution for the mobile phone business,” said CEO Heinrich von Pierer in a speech delivered to shareholders. “That is not the case, or not yet the case. But it is naturally quite clear to us that there is a need for quick action here and for a strategic orientation.
Von Pierer had previously said Siemens has four options for the unit: fix, cooperate, sell or close.
Rumors surfaced last month that Siemens was in talks to sell its mobile phone business to China’s Ningbo Bird. The Chinese company has a distribution agreement with Siemens in China.
Siemens is the world’s fourth largest mobile phone maker.
Another loss-maker is the group’s IT services unit, Siemens Business Services (SBS). The unit posted a fourth-quarter loss of €25 million, compared to a profit of €44 million in the same period a year earlier.
Siemens attributed the change in the year-on-year profit of SBS primarily to “an unfavorable revenue mix and severance charges.” In his speech to shareholders, von Pierer spoke of “fundamental changes in the market that require appropriate adjustments.”
Last week, the German business publication Manager Magazin, citing sources close to SBS, said Siemens is mulling the breakup of its IT services unit. The plan calls for Siemens to take over the unit’s software operations, its hardware business to go to Fujitsu Siemens Computers (Holding) BV, in which Siemens has a 50 percent stake, and its outsourcing activities to be sold off.
Siemens declined to comment on the report.
SBS is a member of the TIS consortium that has submitted a bid to modernize the communications infrastructure of Germany’s armed forces, the Bundeswehr. The consortium includes Deutsche Telekom and IBM.
Von Pierer, who has been at the helm of Siemens for 12 years, is handing the reigns over to Klaus Kleinfeld, after the shareholder meeting. Von Pierer will take over as chairman of the supervisory board.
