Siemens AG has insisted it is still in talks with potential partners of its loss-making enterprise network unit, despite reports that the last potential bidders have walked away from the table.
According to FT Deutschland, a consortium of financial investors has decided not to continue with talks to buy the unit, but Munich, Germany-based Siemens insisted that talks with unnamed buyers are ongoing and it is in no rush to reach an agreement. The FT Deutschland also said Cisco Systems is closely monitoring the situation.
Sale of the enterprise networks business is a key element of the plan by chief executive Klaus Kleinfeld to ensure the conglomerate only consists of businesses that earn a satisfactory rate of return. He has been badly rattled by the decision by Taiwan-based BenQ Corp to put Siemens’ handset business in Germany into liquidation. Siemens handed the business over to BenQ in 2005 with 250m euros ($307m) in cash to integrate the product lines. It also agreed to subscribe 50m euros ($61.4m) to newly created BenQ shares.
When BenQ decided to pull the plug on the German operation, most of the anger was directed against Siemens, which was adamant that it chose BenQ after assurances of how the staff would be treated.
After Siemens put its carrier network business into a 50-50 partnership with Nokia in June, Kleinfeld said he was in talks to form a number-two player in the enterprise comms market.
The storm over BenQ has thwarted his plans. With sales down 3.4% to 3.3bn euros ($4.3bn) last year, the enterprise network business recorded an operating loss of 195m euros ($252m). But the cuts needed to push it toward profit would be hard to achieve in the current political climate.