Siemens (SI) Cuts Jobs, A Lesson For GE (GE)

Industrials

Published: February 26, 2008 5:43 am

The new CEO of Siemens (NYSE: SI) is not a very nice fellow. Depending on which press account is accurate, he is gutting the telecom equipment part his company by cutting between 3,800 and 6,000 jobs. Either way, that is a lot of people out of work.

Revenue at the unit has slowed as it has at related firms like Alcatel-Lucent (NYSE: ALU) and Nortel (NYSE: NT). Siemens has said on more than one occasion that it will do whatever is necessary to hit its 2008 growth and profit targets.

GE (NYSE GE) might take a lesson here. Over the last year, Siemens shares are up 20%. GE’s are slightly down. The US company’s healthcare unit posted flat revenue and operating profit in 2007. The company’s industrial business did not do much better. Together, these two operations were over $33 billion of GE’s revenue.

Wall St. has expected more from GE. It has made the case that growth in emerging markets will improve the company’s financial picture. But, GE has some lower hanging fruit. It needs to cut costs at its under-performing units.

Douglas A. McIntyre

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