Siemens cuts more jobs, focuses on IP and broadband

Siemens AG will eliminate another 5,000 positions in its Information and Communication Networks Group (ICN), bringing the total job cuts to some 10,000 out of 53,000 employees worldwide. But the company insists ongoing research and development and customer service won’t be unduly affected.

“We don’t want to cut costs in research and development and innovative activities,” said spokesman Peter Gottal. “We expect to see job cuts in all functions and all divisions, as well as in all regions, so this is not one specific region or division.”

Siemens also said ICN will halve the number of production facilities worldwide, as part of its plan to cut costs by US$1.8 billion, and added that restructuring of its Information and Communication Mobile Group (ICM) is on schedule. The company had previously announced 2,000 job cuts in that division.

Under the direction of ICN’s new president, Thomas Ganswindt, the division will focus its strategy on the key areas of IP convergence and broadband data access, Gottal said. While research and development expenditures will remain at current levels, 80 per cent will be devoted to these two areas, he said, adding that the move doesn’t mean cutting other products or eliminating service, at least for the time being.

“I cannot see any direct effects on other product lines,” he said. “Of course we have IP routers, we have optical networks, we have products for carriers, products for enterprise customers, and so on, but we said these two fields are more or less focus fields, in which we wish to develop market leadership worldwide. Streamlining the portfolio is always an ongoing task, but there is nothing to announce right now.”

One analyst said it’s an obvious strategy for Siemens to focus its efforts, but it faces an uphill climb.

“It makes sense for Siemens not to try to be all things to all people, but to stake out a niche or find some areas where it’s easier to defend their position,” said Lars Godell of Forrester Research Inc.’s Amsterdam office. “The question is, how sensible is it for them to focus on these two areas? These are two very promising areas, but it’s going to be tough, regardless of which area they decide on, because there is no easy way out for anybody.”

Siemens staked a claim in the broadband market in February, when it announced plans to buy DSL equipment maker Efficient Networks Inc. for some US$1.5 billion.