Siemens Looks to Sell Enterprise Networks Group

Mon, November 27, 2006

German electronics and engineering conglomerate Siemens is discovering that selling products can be much easier than selling parts of the company.

Talks to unload Siemens Enterprise Networks, an unprofitable unit that sells communications equipment to businesses, "are continuing" with several interested parties, but no buyer has been found yet, Siemens spokeswoman Monika Brucklmeier said last week.

The talks are focusing on either selling the unit completely or allowing partners to take a stake, she said.

Since taking over as chief executive officer (CEO), Klaus Kleinfeld has shifted the focus of the German engineering giant away from low-margin manufacturing areas, such as telecommunications equipment, computers and chips, to areas he views as potentially more profitable, including factory automation, power generation and automotive systems.

Siemens Enterprise Networks is one of the low-margin businesses that Kleinfeld wants to sell off.

Brucklmeier declined to confirm a report in the German edition of the Financial Times that claimed talks had collapsed with the buyout companies, Permira Advisers and Apollo Management.

Avaya, Cisco Systems and Nortel Networks are among those rumored to be holding talks with Siemens.

Last year, the German manufacturer ended a long search for a company to take over its unprofitable mobile phone manufacturing unit. It ended up giving Taiwan’s BenQ 250 million euros (US$322 million) to take control of the unit.

In September, BenQ Mobile filed for bankruptcy protection in Germany after its Taiwanese parent decided to stop investing in the money-losing operation.

Since then, Siemens has been under fire by local labor union heads and politicians for unloading a manufacturing business to a company that, they claim, had no real intention of continuing production in Germany.

Earlier this year, Siemens and Nokia agreed to merge their telecommunications infrastructure units into a new joint venture, Nokia Siemens Networks.

-John Blau, IDG News Service (Dusseldorf Bureau)

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.

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