Siemens sinks into red

July 25, 2001 Posted: 1408 GMT

LONDON (CNN) -- German communications and engineering company Siemens posted a third-quarter loss, as its chip making unit prepares to axe jobs. 

The 489 million ($428 million) loss for the three month period between April and June 30 excludes losses from its 51-percent owned chip maker Infineon Technologies, Europe's second-largest, and one-time items.

Infineon is expected to announce plans to slash 5,000 jobs, or nearly 15 percent of the work force, The Wall Street Journal reported, citing a supervisory board member.

Siemens' Chief Executive Heinrich von Pierer has confirmed there will be further job cuts at is units, but declined to give details.

The company has already unveiled plans to drop 8,000 workers at its telecoms unit and 2,000 at its IT services arm this year.

Munich-based Siemens had been expected to report losses after telecom operators cut back on spending as an economic slowdown in the U.S. spreads across the Atlantic to Europe and Pacific to Asia.

Roland Koch, the executive in charge of Siemens' fixed networks telecoms business ICN, is departing the company in the wake of the losses.

Telecom operators have spent more than $100 billion on acquiring high-speed mobile phone licences in Europe, taking on crippling debt that has curbed spending on networks.

And consumers are not buying new phones, as confusion reigns around when the operators will switch services to faster networks and the poor performance of WAP, or Internet-enabled phones.

"It appears that the global economic environment will continue to be difficult over the next few months," the company said. "Siemens expects that net income for the fiscal 2001 will be below last year's level."

Demand for semiconductors has fallen sharply as sales of mobile phones and personal computers wane. Infineon posted a net loss of 371 million, or 0.59 per share, compared with a profit of 266 million, or 0.43 a share in the same three months last year.

Sales in the three months to the end of June including Infineon rose 19 percent to 21.4 billion. Analysts polled by Reuters had forecast sales in a range of 17.5 billion-23.2 billion.

Siemens posted a third-quarter net profit of 1.6 billion, including Infineon and special items. Those special items includes the 3.5 billion pretax gain  from the transfer of a stake in chip unit Infineon to its pension fund.

The company did not provide a comparable third-quarter figures from the year-ago period.

It mobile phone and networks businesses took a charge of 790 million in the third-quarter to reorganize its activities as stocks of telecom equipment built up and demand declined.

The telecoms business has cut more than 10,000 jobs so far this year and pledged to achieve savings of some 1.4 billion, according to Reuters.

Net income for the first-nine months from October 1 to June 30, excluding Infineon and special items, fell to 652 million from 1.4 billion in the same period a year ago.

	Want the full story? Search for free company info...
	Enter Company Name:-