Siemens to Cut 7,000 Jobs at SEN Unit - Source

 
 
By Reuters -  |  Posted 2008-02-25
 
 
 

MUNICH, Feb 25 (Reuters) - Germany's Siemens plans to cut 7,000 jobs or two-fifths of the workforce of its corporate telecoms unit, which it has been trying to sell for years, a source with knowledge of the matter said on Monday.

The source said the engineering conglomerate would publicise its plans for the loss-making unit, Siemens Enterprise Networks, after a meeting of its economic advisory committee on Tuesday.

SEN's results are reported under "discontinued operations" in the group's financial statements. Siemens valued the unit at 567 million euros ($840. million) at the end of its last financial year at end-September.

SEN, which specialises in communications systems for large corporations, has suffered from the rise of Internet telephony.

"From a valuation point of view this is negative news," DZ Bank analyst Karsten Oblinger wrote in a note. "We guess that the latest news flow reflects value destruction of approximately 1 euro per share in our SOP (sum of the parts).

Siemens shares traded up 1.2 percent at 88.70 euros by 0918 GMT, broadly in line with the German DAX index.

"The positive aspect is that CEO Loescher is clearly executing the restructuring of the group," Oblinger added.

Peter Loescher, who took charge amid a corruption scandal at Siemens in mid-2007, has reorganised the conglomerate's former dozen units into three major business areas -- industry, healthcare and energy.

In Germany, where SEN employs 6,200 staff, Siemens will axe 2,000 jobs and transfer a further 1,000 to a possible partner or buyer, sources close to the company said.

Sources with knowledge of the matter have told Reuters that Siemens is negotiating with competitors Alcatel-Lucent and Nortel as well as financial investor Cerberus about a possible sale or merger of SEN.

(Reporting by Jens Hack; Editing by Quentin Bryar)

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