Infotech unit gives a major headache for Siemens AG

Aug 3 | Updated: Aug 4 2005, 06:18am hrs
Worker representatives at Siemens Business Services, the unprofitable information technology services unit of Siemens AG, are meeting senior management and personnel directors on Wednesday to deliberate on the future of the division.

Participants in the meeting include Hildegard Cornudet, who heads the divisions works council and also sits on Munich-based Siemenss supervisory board, Divisional Chief Adrian von Hammerstein as well as Annette Grimm, the units Head of Human Resources, spokeswoman Bettina Rother-Neumann said. Together, they would discuss the "economic situation" of SBS, she said.

Siemens Business Services, whose loss in the quarter through June widened to 109 million euros ($134 million), is already cutting jobs and splitting off parts of the business as Chief Executive Klaus Kleinfeld demands the 12 main Siemens units reach company profit targets in two years at the most. The division was one of three unprofitable units last quarter.

The company will hold an extraordinary board meeting at the end of August in which Siemens will assess measures to bring the lagging units within profit targets originally set by the company in 2000. Some 4,000 jobs at SBS may be lost in the coming months as Siemens tries to reduce costs, Germanys TZ newspaper reported on July 30, citing company insiders.

Siemens Business Services employs some 36,100 people worldwide, and in Germany the head count is close to 15,100. Siemens created the division 10 years ago as a unit of its Siemens Nixdorf Informationssysteme AG business, which was formed out of the 1990 purchase of computer-maker Nixdorf Computer AG. The divisions main aim then was to provide computer services to Siemens. Shares of Siemens declined by as much as 50 cents, or 0.8%, to 63.73 euros and traded at 63.80 euros as of 1:27 pm in Frankfurt. The stock is up by 10% in 2004.

Bloomberg