Computer, telecom units fuel Siemens growth

Electronic News, Feb 19, 1996 by Torsten Busse

(IDG News Service) munich--International growth helped propel Siemens AG's computer and communications divisions into a strong first quarter and continue the turnaround that began last fiscal year.

Despite the strong German mark, which boosted prices of its products outside Germany, Siemens Nixdorf Informationsystems AG (SNI) saw vigorous international growth during the first quarter of fiscal 1995-96, ending Dec. 31, 1995, the company reported.

SNI's orders and revenues during the quarter rose 11 and 14 percent, respectively, compared to the same quarter the year before. The Siemens' computer group's strong first quarter comes on the heels of its first profitable fiscal year in half a decade.

In fiscal 1994/95, SNI reported a modest after-tax profit of 23 million marks ($16.3 million).

"SNI is more independent within Siemens to achieve its very aggressive goals," said Ludowic Richer, research analyst at Dataquest's PC group.

"Their re-engineering process has worked. Roles (within the company) have been redefined and they are now able to do what it takes," he said.

Meanwhile, Siemens' semiconductor group profited from stable prices on international markets for memory chips, the company said. The semiconductor unit's orders and revenues in the quarter rose 28 and 30 percent, Siemens said.

The company's communications sectors also reported double-digit growth rates. Leading the pack was Siemens' private communications systems unit, which manufactures PBXs and telephone hand sets. The unit's revenues rose by 17 percent during the first quarter.

"Business in telecom components used for digital public exchange systems and mobile telephones as well as for memory devices and chipcard integrated circuits remained buoyant, Siemens said in a statement.

Overall Siemens' group net profit in the quarter rose 12 percent to 503 million marks.

Sales in the first quarter of its 1995/96 business year grew 6 percent to 19.7 billion marks, while orders were flat at 22.2 billion marks.

The company's workforce rose to 375,000 at the end of December from 373,000 at the end of September, due to consolidations mainly in the Asia-Pacific region.

Siemens U.S. business units posted a significant 17 percent increase in sales to $1.86 billion for the first quarter, over the corresponding 1994-95 period, when sales were $1.59 billion.

New orders for the first quarter rose approximately 19 percent to $2.08 billion, compared to $1.75 billion in the same quarter of fiscal 1994-95.

In the first quarter Siemens and Motorola announced their intention to build a joint facility in the U.S. to manufacture the latest generations of DRAM semiconductors (EN, Oct. 30, 1995).

Siemens also accelerated its entry into the $2 billion North American wireless communications terminals market, winning a $40 million contract to supply Personal Communications System equipment to GO Communications.