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Siemens to cut 7,000 jobs

Germany's Siemens plans to cut 7,000 jobs of the workforce of its corporate telecoms unit, which it has been trying to sell for years, a source said.

The source said the engineering conglomerate would publicize its plans for the loss-making unit, Siemens Enterprise Networks (SEN), after a meeting of its economic advisory committee on Tuesday.

SEN's results are reported under “discontinued operations” in the group's financial statements. Siemens valued the unit at €567 million ($840 million) at the end of its last financial year at end-September.

SEN, which specializes in communications systems for large corporations, has suffered from the rise of Internet telephony.

“From a valuation point of view this is negative news,” DZ Bank analyst Karsten Oblinger wrote in a note. “We guess that the latest news flow reflects value destruction of approximately €1 per share in our SOP (sum of the parts).

“The positive aspect is that CEO Loescher is clearly executing the restructuring of the group,” Oblinger added.

Peter Loescher, who took charge amid a corruption scandal at Siemens in mid-2007, has reorganized the conglomerate's former dozen units into three major business areas - industry, healthcare and energy.

In Germany, where SEN employs 6,200 staff, Siemens will axe 2,000 jobs and transfer a further 1,000 to a possible partner or buyer, sources close to the company said.

Sources with knowledge of the matter have told Reuters that Siemens is negotiating with competitors Alcatel-Lucent and Nortel as well as financial investor Cerberus about a possible sale or merger of SEN. (Reuters)