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Siemens plans to cut 1,250 jobs

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CIOL Bureau
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Georgina Prodhan



FRANKFURT: German engineering conglomerate Siemens wants to cut around 1,250 jobs in its fixed-line telecoms business to reduce over capacity and make it more competitive, the company said.



Siemens said it had already begun talks with its works council and staff representatives over how to manage the job cuts, a day after new Chief Executive Klaus Kleinfeld took over from Heinrich von Pierer.



About 600 jobs cuts were planned in Germany and 650 abroad, Siemens said, in addition to the 100 it said last year it planned to cut at its headquarters.



A Siemens spokesman said the cuts were not yet finalised, and did not rule out that the number could come down during negotiations if alternatives such as longer working hours were agreed.



He said the company hoped to achieve the necessary cuts during this fiscal year, which runs to the end of September. The spokesman gave no details of restructuring costs.



Pauly said the planned job cuts would not necessarily mean lay-offs. "Our objective is to transfer the affected employees within Siemens wherever possible or to find socially acceptable solutions." Siemens employs about 430,000 people worldwide.



The company's newly merged telecoms unit Com saw its operating profit fall in the quarter to the end of December, excluding a one-off gain from the sale of a stake in Juniper Networks.



Big losses at its ailing mobile handset unit depressed profits at the division, Siemens's biggest, but even without this factor profits would have been flat. Com sales fell 7 percent to 4.243 billion euros.



"The Siemens Communications Group is responding to the continued difficult environment and price pressure in the wireline business by making adjustments to its product mix and focusing on new fields of growth," it said in the statement.



"The sustained turnaround in the market for wireline technology that had been hoped for has thus far failed to materialise."



Lothar Pauly, the head of Siemens Com, said the fixed-line unit would now focus more on new growth areas such as Voice over Internet Protocol (VoIP), Ethernet access, applications and services for broadband networks or home entertainment.



Wolfgang Mueller, IG Metall trade union official in charge of the union's relations with Siemens, criticised the proposal as a piecemeal approach.



"Our worry is that it's just salami slicing," said Mueller, who sits the Siemens supervisory board. "We are still waiting for a real strategy for the Com unit."



By 1503 GMT, Siemens shares were the biggest faller on Germany's benchmark DAX index, down 3.5 percent to 61.40 euros. They had closed 2.9 percent higher on Monday after Siemens reported forecast-beating first-quarter profits.



(Additional reporting by Hans Nagl in Munich)

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