Siemens seeks to cut mobile phone losses before sale

Siemens may cease selling its mobile phones in Israel and several Asian countries as it prunes unprofitable operations in a last-ditch bid to save its phone division.

Offering early details of planned savings two days before the CeBIT trade fair opens in Hanover, communications chief executive Lothar Pauly said the German electronics group wanted to smarten up the loss-making mobile-phone operation for a potential suitor.

"We are losing money in the mobile-phone business," he said in Munich on Tuesday.

Pauly said six of the eight divisions he oversees were in profit.

The other unprofitable sector is Siemens' business manufacturing cordless phones.

The savings would involve practically no job losses as they would concentrate on marketing cutbacks.

Pauly mentioned Israel and Asian nations as examples of markets under review.

A Siemens spokeswoman said later no particular locations had been earmarked for closure yet. Reviewing profitability was a normal, ongoing business process during restructuring. She stressed Siemens commitment to China, as one of its biggest mobile-phone markets.

Pauly said the German conglomerate would also cease developing special US-only models. Siemens is to present five new phone models at CeBIT, the world's biggest IT and communications fair, this week, and will launch 15 new models in the year as a whole.

The mobile phone division, originally told to save 500 million to 600 million euros (US$533 million to US$666 million), must save an additional 400 million euros annually, Pauly said.

He said that a suitable partner still had to be found if the division was to be sold or placed in a joint venture.

The future of the division remained undecided, but Siemens regarded closure as the worst option since this "destroyed value."

Quarterly losses at the mobile phone division have exceeded 140 million euros for two quarters running.

"Our products are as good as or better than those of competitors," Pauly said.

"But we have been reaching the market too late. Delayed launches have repeatedly damaged our market position," he said.