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Siemens considering more telecom job cuts

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CIOL Bureau
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FRANKFURT : Siemens AG's fixed-line telecommunications equipment unit ICN said on Monday that it was considering shedding as many as 4,000 jobs as it grapples with a difficult market. "That's a planning guide. There have been no decisions," a spokeswoman at ICN said.



She confirmed statements from unions reported earlier this month that 4,000 jobs could go by September 2003, which includes 1,300 cuts already announced on August 21. The 2,700 new cuts are on top of 17,800 announced for ICN in the last year.



ICN, the second-largest unit at Siemens in terms of sales, is the problem child at the electronics and engineering giant. It is racking up losses amid overcapacity and a lack of demand as its clients such as Deutsche Telekom struggle with debt after spending heavily on high-speed mobile licences.



"I think the additional 4,000 cuts would reach a sustainable cost level for this year," said an analyst. "Entering 2003 they could be forced to cut again," he added. Analysts also said the job cuts were an admission by ICN that the prospects for the market may be bleaker than originally signalled by the unit at a conference at the end of July.



ICN told investors last month that conservative estimates for the telecoms carriers market meant global equipment sales would be flat at 42 billion euros through to 2005. "The flattish statement was perhaps an understatement," said an analyst at a major bank. "Basically they are admitting that the market will fall." Market researchers and financial analysts have said they expect a market decline of between five and 10 percent in 2003. Merrill Lynch forecast a 10 percent 2003 sales decline at ICN.



No surprise


At 1030 GMT Siemens shares were trading down 0.14 percent at 51.38 euros, while the blue-chip German DAX was up 1.24 percent. The shares have risen 23 percent in the last three weeks. The fact that ICN is considering further cuts comes as no surprise.



The Siemens' works council told Reuters on August 2 that the firm had signalled it wanted to reduce the number of jobs at ICN by about 4,000 by the end of September 2003, bringing to about 33,700 the number employed at ICN. Since last year the Siemens group has announced it is shedding over 32,300 jobs, representing about seven percent of the workforce, while it has also said it plans to sell a business at Siemens Building Technologies with 1,300 jobs.



In the first nine months of 2002, ICN made a loss of 366 million euros ($355.3 million) on top of a full-year 2001 loss of 861 million. Last year, IT generated 62 percent of its sales in Europe, 24 percent in the Americas and 11 percent in the Asia/Pacific region.



ICN is one of three units in Siemens' Information and Communications division. The other two units have posted nine-month profits. The mobile infrastructure and handset unit, ICM, made 72 million euros for the nine months, while IT consultancy unit Siemens Business Services made 75 million.



© Reuters

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