Siemens Board to Discuss Mobile Phone Unit

FRANKFURT, Germany (AP) _ Shares of Siemens AG were up nearly 2 percent Monday after the company said its supervisory board was holding talks on its suffering mobile phone unit. <br/><br/>The Munich-based

Monday, June 6th 2005, 9:49 am

By: News On 6

FRANKFURT, Germany (AP) _ Shares of Siemens AG were up nearly 2 percent Monday after the company said its supervisory board was holding talks on its suffering mobile phone unit.

The Munich-based company declined to comment on a report by the Financial Times that it was looking at a joint venture with Taiwanese phone maker BenQ Corp., but said board members would be talking about the unit's future.

Shares of Siemens were up 1.8 percent to 61.35 euros ($75.39) in afternoon trading in Frankfurt.

Siemens said in April that it planned to spin off and sell a majority stake in its cell phone unit amid declining sales and losses, including a loss of 138 million euros ($169.6 million) in the second quarter.

Taipei-based BenQ declined to comment on the newspaper report, which cited people familiar with the talks.

Other likely partners for Siemens could include Motorola Inc. and South Korea's LG Electronics Inc. and Samsung Corp.

Dan Bieler, an analyst with London's Ovum, said the meeting was a sign that some solution could be possible, but questioned whether any joint venture would bring Siemens back from the brink.

``In our view, the chance for Siemens Mobile lies in targeting the low-end segment. This might not be the most fashionable area to operate in, but might prove more profitable than past attempts to serve the fickle and rapidly changing tastes of high-end users,'' he said.

Low-end models favor function over flash and have been viewed as the best market for phone makers, given the sheer number of subscribers in Africa, the Middle East and places like India where consumers don't have the means to buy high-end models.

BenQ is Taiwan's biggest maker of mobile phones, selling them under its own name in China. It also manufactures phones for Motorola and NEC Corp. The company was spun off from electronics company Acer Inc. in 2001.

Beiler said that Siemens would probably have more to gain if it took a minority stake in any joint venture, but the problem is lack of demand for its handsets.

``To effectively overcome its 'handset crisis,' Siemens should realize that its core strength is technology and not design or brand,'' he said.