Siemens will sell a majority stake in the last remaining telecommunications-equipment business under its control as it restructures to narrow its focus and raise profit. Europe's largest engineering company by sales said that it will sell an 80.2% stake in its cordless phone unit, which had about $1.25 billion in sales last year, to Germany's Arques Industries. Siemens didn't disclose the financial terms but said it expects to book a "double-digit-million" euro loss when the deal closes in September.
The divestment process, carried out in stages since 2005, has reshaped a company that began as a 19th-century manufacturer of telegraphs and still generated about €20 billion in annual revenue from telecom equipment earlier this decade. In more recent years, Siemens's telecom business racked up big losses as lower-cost rivals snapped up market share.
Siemens's telecom unit also sparked a massive bribes-for-business probe that burst into public view after a German police raid in late 2006. The Munich-based conglomerate has since flagged more than €400 million in suspicious transactions in 2000 to 2006 at its telecom businesses and was fined €201 million by a German court last October for bribes paid in Nigeria, Russia and Libya.
The company outlined plans last month to cut 16,750 jobs world-wide, or about 4% of Siemens's work force, and further streamline operations. They said the steps are necessary to bring profit margins in line with rivals and weather toughening business conditions as the global economy slows.
Management said that it had secured guarantees from Arques to maintain the cordless-handset unit's German manufacturing facilities for the next three years. The unit has 2,100 employees, most of them in Germany. (info from The Wall Street Journal)