Siemens (SI) Wants To Do Better Than GE, But It Already Does

By Douglas A. McIntyre Published Nov 2, 6:19AM EDT

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The new CEO of Siemens (SI) wants margins more like those at GE (GE), which is in many of the same businesses. Oddly enough, over the last year, Siemens shares are up almost 50% while GE’s are less than 20% higher.

But, that is not preventing the new man, Peter Löscher, from planning to reduce head count like a crazy man. According to the FT Siemens is "preparing a series of aggressive earnings targets for senior managers, along with thousands of job cuts." In the first nine months of this year, the operating margin for Siemens’ industrial businesses was 8.5 per cent, against 14.7 per cent for the equivalent activities at GE.

There is no reason that Siemens cannot improve its margins. By all accounts management at the company has not been aggressive at driving down costs. It will now adopt the philosophy of Jack Welch and chop jobs until it is clear that the revenue potential of the company may be hurt. It would not be surprising to see several hundred million dollars of expenses gone by the end of 2008.

That is a lot of jobless people. And, probably another big gain in the SI share price.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.