Siemens, Europe's biggest engineering conglomerate, unveiled plans on Thursday to slash 4,200 jobs at its information technology unit, helping to set it up for a possible spinoff.
Chief Financial Officer Joe Kaeser said the 4,200 job cuts at Siemens IT Solutions and Services (SIS) would be made by autumn 2011 and would include 2,000 jobs in Germany. SIS currently has about 35,000 employees, with nearly 10,000 in Germany.
He said Siemens would invest an additional amount of more than €500 million in SIS, which could include acquisitions to boost some of unit's businesses.
Kaeser also said Siemens would turn SIS into a legally independent business unit by October.
Transforming a business into an independent unit can be the first step in its disposal.
Kaeser said making SIS independent would give it more options, but when asked by reporters, he refused to give details or be pinned down on the timing of a decision on the future for SIS. He said only that the focus now was to make it attractive under a new business concept to expand its software solutions and re-train personnel.
Analyst Michael Busse of Landesbank Baden-Wuerttemberg (LBBW) said Siemens wants to get rid of SIS.
“SIS is too big to be a niche player and too small to be a global player. It is stuck in the middle. It only had an operating margin of around 2% last year. It is clearly the weakest spot within Siemens,” Busse said.
“(CFO Joe) Kaeser said in January they want to put it on IPO or a sale by 2012.”
SIS has had falling sales in recent years. Revenue in 2009 fell 12% to €4.7 billion and new orders were off by 15% while operating profit fell by 38% to €90 million. (Reuters)