Siemens CFO Sees Stronger Buying Interest for SEN Unit

Published on: 7th June 2008

FRANKFURT -(Dow Jones)- German engineering company Siemens, Saturday said it sees good buying interest for its Siemens Enterprise Communications unit, but feels under no pressure to act quickly on the planned sale.

Negotiations with interested parties about SEN "are in an advanced stage," Siemens Chief Financial Officer Joe Kaeser said Saturday at the sidelines of an event in Frankfurt.

However, the CFO declined to be more specific or name any of the potential bidders for the unit Saturday.

People familiar with the sales process previously told Dow Jones Newswires that Alcatel-Lucent, Nortel Networks and U.S. private equity house Cerberus Capital Management have shown interest in SEN.

Kaeser said demand for SEN has "developed well," adding that bidders have become more interested in the unit after Siemens has started a restructuring program. Kaeser said the restructuring program has proved to be necessary, adding that otherwise it wouldn't have been possible for Siemens to sell the unit in what he termed a "valuable transaction."

At the end of April, Siemens said it booked in the second quarter of its current fiscal year restructuring costs of around EUR109 million.

Kaeser said the Siemens unit Siemens Home and Office Communications, or SHC, which makes wireless fixed-line handsets sold under the brand name Gigasets, "in principle" also isn't part of Siemens' new three core business sectors, namely industry, energy and healthcare.

Kaeser said there is no pressure to sell SHC "as it is a very strong" and "extremely innovative" brand. However, the unit isn't growing anymore, and "if we were to find a reliable and strong partner," Siemens would be willing to negotiate the matter.

SHC and SEN are the two remaining business units of the former Siemens COM division currently still under the roof of the German engineering conglomerate, which makes a wide range of products from light bulbs to power trains.

Kaeser said Siemens is "on track" to reaching its cost-savings targets for sales and administrative costs. He said Siemens sees savings potential that can be realized quickly.

Siemens aims to cut external counseling costs by around EUR300 million until 2010, and IT costs by around EUR200 million. Kaeser said these cost reductions can be achieved "relatively quickly" without repercussions on existing jobs.

Kaeser said Siemens is "quite satisfied" with the sales development in its current third quarter. In particular, the Automation & Drives business unit has seen a positive sales and earnings development and remains one of the main drivers in Siemens' business, Kaeser said.

Siemens' business year ends Sept. 30.

-By Nico Schmidt, Dow Jones Newswires; +49 69 297 25 500; nico.schmidt@dowjones.com

(END) Dow Jones Newswires

 

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