Siemens ICN Gets Positive

MUNICH -- Siemens’ fixed-network business has turned itself around. After the second positive quarter in succession, Thomas Ganswindt, President of the Information and Communication Networks Group (ICN), sees his unit on track to achieve lasting success: “Following implementation of our restructuring measures, we have now set our sights on growth and profitability.” The factor that will ensure future success, Ganswindt continued, is the innovative power of ICN. As an example, he cited LifeWorks, a concept designed to enable unified communications. With LifeWorks, he said, his unit has established itself as an innovation driver in the telecommunications industry and succeeded in winning a number of new customers. Particularly in the largest single market, the U.S., ICN has been able to beat out the competition to win orders from major carriers.

The groundwork for this positive overall development at ICN was laid by meeting the cost-cutting target of 3.5 billion euros defined in the restructuring program PACT (Profit and Cash Turnaround) for fiscal years 2002 and 2003, Ganswindt noted. “Now, following the successful completion of restructuring and comprehensive improvements in our business processes and cost positions, and with our innovative solutions for enterprises and carriers, ICN is well positioned to be successful as a leading player – both at today’s low market level, and even more so if the market recovers,” he continued. He emphasized that ICN is again operating profitably in both its segments (carrier and enterprise), adding that the highest growth rates are currently shown by the Carrier Services business, which was launched at the beginning of last fiscal year.

Innovation is a key issue for Siemens ICN and, together with the Group’s regained financial stability, a factor that will guarantee successful business in the future, Ganswindt said. “We have recently demonstrated a number of times that ICN is very capable of turning its innovative power into a concrete competitive advantage in the marketplace.” Ganswindt cited the example of the United States, where his Group has succeeded in winning new customers with innovations in the area of optical networks and the convergence of voice and data networks. These new customers include industry leaders such as AT&T and SBC. “And with our order from the U.S. cable network operator Cablevision for our softswitch SURPASS hiQ 8000, we have gone straight to No. 1 in the growth market for Voice over Cable.”

Continuing investments in innovative technologies and solutions have been budgeted to secure the unit’s leading position with new solutions in new markets. ICN has focused its outlays for research and development on growth segments of the future, with about 90 percent of its R&D expenditures now going into the development of Internet-based technologies. Despite significant losses in recent years, ICN has always kept its R&D investments at a constant level of about 12 percent of sales.

Siemens Information and Communications Networks Inc.