Siemens to lay off 2,300 in mobile communications unit

SIEMENS AG, Germany's largest electronics and engineering company, said it will cut 2,300 jobs at its Information and Communication Mobile (ICM) unit as demand for wireless networks falls.

The cuts will help save a total of €1 billion through 2004, Munich-based Siemens said in a statement. The unit, which employed 28,600 people at the end of 2002, has already announced a reduction of 2,000 positions this year. About 500 of the latest job losses will be in Germany.

Chief executive officer Heinrich von Pierer, who has overseen 32,000 job cuts in two years, last week personally took charge of the three ICM units, which include mobile phones, fixed-line networks and information technology services, in order to speed an overhaul and stem losses.

Shares in Siemens, the world's fourth-largest maker of mobile phones, fell as much as 80c, or 1.6%, to €48.90, and traded at €49.22 at 4.15pm in Frankfurt. The stock has advanced 22% this year.

Siemens and rivals including Ericsson AB, Nokia Oyj and Nortel Networks have shed more than 200,000 jobs in two years as demand for wireless networks declines for the first time. Siemens expects the market to contract as much as 20% this year after falling 15% last year.

"To add to that, revenue in the handset market is stagnating, even as unit sales rise," ICM head Rudi Lamprecht said in the statement today. "Margins in the business are under considerable pressure."

Ericsson, the biggest maker of wireless networks, is reducing its workforce to 47,000 next year a level last seen in 1968 from 105,000 in late 2000.

ICM, which makes handsets and wireless network gear, reported a profit of €17 million, up from €9m a year earlier. It would have posted a loss without one-time gains. Sales fell 14% to €2.16bn.