Siemens Investigating Options For Handset Unit
By Carlo Longino, Mon Dec 13 20:45:00 GMT 2004

The company is investigating the future of the world's fourth-biggest handset vendor, but won't comment on a report saying a Chinese company is a potential buyer.

Siemens denies it has reached a deal to sell its handsets business to Ningbo Bird, a Chinese manufacturer with which Siemens already has a distribution deal. Siemens' mobile-phone business has been struggling a bit of late, losing 141 million euros in the third quarter, results blamed partly on a bug in its Series 65 models. Siemens' market share in the quarter was at 7.6 percent, a point and a half lower than the year before.

The company overall has been going through a long restructuring process, and its CEO is stepping down in January after 12 years, so any move involving the handset unit wouldn't be a total shock, though the company's brand is still one of the most recognizable in the market. The unit's been under pressure to meet performance and profit goals as the Siemens has said it will close or sell underperforming businesses it can't fix.

French manufacturer Alcatel combined its handset business with China's biggest manufacturer, TCL, earlier in the year in a joint venture assumed by many to be a precursor to Alcatel's pulling out of the market. A deal between Ningbo Bird and Siemens could take a similar shape, particularly as Siemens would like to grow its handset sales in China, and Ningbo Bird wants to boost its sales outside the country. The two companies would make a good fit, given Siemens' strength in R&D and software, and Ningbo's manufacturing heft in China.

A Ningbo purchase of the Siemens unit, and its brand, would mirror Lenovo's purchase of IBM's PC business: a Chinese company buying a well-known Western brand to support its overseas expansion. Along with the deals struck last week by Chinese infrastructure vendors, talk of a Siemens-Ningbo Bird deal underlines the growing stature of Chinese companies in the global mobile industry.