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Siemens ICN Chief Takes Leave

Light Reading
News Analysis
Light Reading
1/30/2002

Siemens Information and Communications Network Inc. has announced the departure of its CEO after just four months on the job.

Mark Floyd took the helm as CEO of ICN's U.S. subsidiary October 1, 2001, as part of a general influx of new blood (see Siemens ICN Names Chiefs). He is leaving tomorrow, January 31, 2002.

Neither Siemens nor Floyd offered any explanation for the departure.

Perhaps one isn't needed: In recent months, the Boca Raton, Florida-based affiliate of Siemens ICN worldwide has been routinely singled out as the black sheep of the group, which appears to be in deep doodoo with Siemens bigwigs. Indeed, ICN as a whole is typically isolated for a dressing down in company financial reports.

The latest earnings report was no exception (see Siemens Back in Black). After touting sales figures for other Siemens divisions, the press release states: "In contrast, sales and orders declined significantly at Information and Communication Networks (ICN), both year-over-year and compared to the previous quarter. As a result of this trend, ICN is currently reviewing the scope of its restructuring program, especially concerning its U.S. operations, and may take additional measures and charges." (Italics added.)

While the U.S. group (known as ICN Inc.) can't be blamed by itself for ICN's problems, it is strategic to Siemens and contributes greatly to the group's revenue picture. In total, ICN stateside contributed €1.7 billion (US$1.46 billion), about 13 percent of ICN's €12.9 billion ($11.1 billion) in sales in fiscal 2001.

Although Floyd had been pressured to make a difference, ICN's latest earnings report showed he'd made no immediately visible headway. Sales in the first fiscal quarter of 2002 were €2.54 billion ($2.19 billion), down 12 percent year over year and 30 percent sequentially. Even more distressing, EBIDTA (earnings before interest, taxes, and depreciation, a general measure of liquidity) was a negative €124 million ($107 million), including all charges, compared to a positive €150 million ($129 million) one year ago.

Siemens says several factors are contributing to the problems. On the sales side, Siemens financial reports cite an overall reduction in orders due to the carrier capex slowdown; slowed growth in U.S. broadband access, particularly DSL; and pricing pressure in switching gear.

EBITDA appears to have been devastated by nonrecurring gains, restructuring charges, and writedowns for accounts receivable, inventory, and VC investments.

ICN has been particularly hard hit by restructuring. The group is in the process of cutting 10,000 jobs and cutting its production facilities considerably worldwide (see Siemens To Cut People and Plants). And more may be on the way, according to the latest financial news. "We continue to assess the need for further action at ICN," said Siemens CEO Heinrich v. Pierer in a prepared statement.

Interestingly, Optisphere Networks Inc., ICN Inc.'s optical subsidiary, has been minimally affected by layoffs, according to ICN spokesman Thomas Phillips.

Back in Boca, Thomas Ganswindt, ICN group president, will take the helm until a replacement is found. "The board is evaluating the situation," an ICN spokesman says.

Ganswindt himself is relatively new on the job, having taken the group presidency after the departure of Roland Koch in July 2000 (see Nortel to Grab Koch?). Koch had been group president of ICN for about two and a half years.

Mark Floyd took over as CEO from Anthony Maher, who'd held the job since 2000 and has since retired.

Floyd's parting from the company seems amicable: "Mark Floyd has played an indispensable leadership role in re-focusing our business on the unique needs of the U.S. market... We're pleased that he will continue to serve Siemens as a consultant," said Ganswindt in a statement.

Floyd came to ICN as part of the acquisition of Efficient Networks for €1.6 billion ($1.37 billion) back in April 2001. Besides the purchase price, Siemens took on €457 million ($393.8 million) in debt during the acquisition.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

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HarveyMudd
HarveyMudd
12/4/2012 | 11:00:28 PM
re: Siemens ICN Chief Takes Leave
ICN has never been very successful in terms of generating revenues. Its operation, R&D. and sales activties are totally disorganized.

Acquisition of Efficient Networks was a very costly decision for the company. It was the most stupid decision.

Optisphere is not doing well at all. It is not clear as to why staff reduction at Optisphere did not work.

Infineon Technologies, a subsidiary of Siemens, has done very poorly. Infineon acquired several companies, including a company by the name Catamaran, which were not in the best interest of the company.

Sioemens has never evaluated the role of various companies in the USA.
reoptic
reoptic
12/4/2012 | 11:00:28 PM
re: Siemens ICN Chief Takes Leave
The ugliest part of Siemans US operation is Unisphere which is hemmoraging cash -- just look at their Edgar filings. They have a great Redstone product line but they are pouring cash into too many other product lines that are not generating revenue. Floyd is convenient scapegoat for losses. Is Dolce next?
optical_man
optical_man
12/4/2012 | 11:00:27 PM
re: Siemens ICN Chief Takes Leave
HarveyMudd says:
"ICN has never been very successful in terms of generating revenues. Its operation, R&D. and sales activties are totally disorganized.
Acquisition of Efficient Networks was a very costly decision for the company. It was the most stupid decision.
Optisphere is not doing well at all. It is not clear as to why staff reduction at Optisphere did not work.
Infineon Technologies, a subsidiary of Siemens, has done very poorly. Infineon acquired several companies, including a company by the name Catamaran, which were not in the best interest of the company.
Sioemens has never evaluated the role of various companies in the USA."

Harvey, Harvey, Harvey....
Thought we had a talk about this;
1) you were to go to work and stay OFF the internet for 3 weeks
2) you were going to find something, ANYTHING, positive to say about something, ANYTHING. (pick a subject Harv, flowers, politics, space programs).
I am getting the feeling that there cannot be many happy mornings/nights around your house. Always complaining.
I know you have it in you to be positive. Just look at your handle, named after a high falutin institution of education (higher than most of the one's we paeons attended anyway).

Say, how 'bout the Fed leaving interest rates alone, thinking that the economy is stabilizing and lowered rates aren't needed at this juncture (there's a topic! say something positive, please!)
Johank
Johank
12/4/2012 | 11:00:27 PM
re: Siemens ICN Chief Takes Leave
Siemens centralised decision making process does not contribute effectively in creating revenue in the short time which differs very much from the yearly reporting used in Europe.

Maybe they should learn from GE how to turn around a company to create a truely global one. Global presence, Texas attitude does not work well if the fundamentals are not in place.
why
why
12/4/2012 | 11:00:26 PM
re: Siemens ICN Chief Takes Leave
The personal attacks toward HarveyMudd are due to jeaolasy of his great expertise in the area. Oaptical_man has nothing to contribute a meaningful discussion. He is probably working for SiemansICN and clueless about the effects of the poor management. Siemens ICN is a loser in the US, because their lacking of understanding American mentality.
myhui
myhui
12/4/2012 | 11:00:24 PM
re: Siemens ICN Chief Takes Leave
He's only been on the job almost four months.
surveyor
surveyor
12/4/2012 | 11:00:23 PM
re: Siemens ICN Chief Takes Leave
a 4 month stint for a CEO is not typically indicative of performance, and certainly not results. My experience is those short stays indicate irreparable personality clashes... with someone in higher places.. or with the Siemens culture in general..
dietaryfiber
dietaryfiber
12/4/2012 | 11:00:19 PM
re: Siemens ICN Chief Takes Leave
Why,

You are clearly not following the HarveyMudd story across these boards. He very rarely has anything good to say about anything, whether he is correct or not.

In this case, I concur that Siemens has many management problems. However, the Infineon comments are rather spurious for they have little or nothing to do with ICN.

All that said, I have worked at Siemens in the past and buy many parts from Infineon. They are an insular company and that causes many problems. The usual practice is to move newly purchased technology to Munich, to rework it some and to push it to all the regions again. EWSD is an example as this (originally known as DE-5 in Boca Raton).

They are however a scary potential competitor with the muscle of an Alcatel. I think they made a mistake eliminating someone who understood the US market like Mark Floyd. He could help break the inward focus of the company.

dietary fiber
zipple
zipple
12/4/2012 | 11:00:19 PM
re: Siemens ICN Chief Takes Leave
The personal attacks toward HarveyMudd are due to jeaolasy of his great expertise in the area. Oaptical_man has nothing to contribute a meaningful discussion. He is probably working for SiemansICN and clueless about the effects of the poor management. Siemens ICN is a loser in the US, because their lacking of understanding American mentality.

__________________________________

People-
Please recognize that Harvey's just a troll. Other sites have many more problems than LR.

For a troll def:
http://tweety.bowlofmice.com/t...

It's not the best def I could find, but it gets the point across.

-Z
etherguy
etherguy
12/4/2012 | 11:00:09 PM
re: Siemens ICN Chief Takes Leave
i can't believe everyone gives this guy so much attention. he is kind of pathetic in my eyes. why bother?
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