Siemens to sell enterprise business unit

While the market digests the announcement about the new Nokia Siemens Networks joint venture, more news from Siemens AG, this time regarding its enterprise product unit, is imminent.

Speaking during a press conference to discuss the joint venture on Monday, Siemens Chief Executive Officers Klaus Kleinfeld said that Siemens is looking for a new home for its enterprise unit. Siemens is in "serious negotiations with partners" that might be interested in the division, he said. "We want to make sure the new organization will become a strong number two in that market," he said.

While Siemens did not specify a time frame, an announcement could happen this week. Steve Blood, a Gartner Inc. analyst, said that his sources close to Siemens say to expect an announcement regarding the enterprise unit very soon, possibly this week.

Siemens' enterprise division develops and sells IP (Internet protocol) and wireless networking products, digital phones for businesses and communications applications. It is part of the Siemens communications group, most of which will be spun off into a joint venture with Nokia Corp., according to an announcement by the two companies on Monday.

Gartner's Blood said that Siemens is likely to do its best to choose a buyer of the unit that will serve existing customers well. Siemens will want to take care of those customers because it's such a large company that there's a good chance its enterprise division customers are also customers of other units, he said.

While the enterprise unit makes up only a small portion of Siemens' revenue, Blood didn't expect to see it up for sale. He would have thought that Nokia, which has been increasingly targeting business customers, would want to include the enterprise business in the joint venture. "I'm surprised they didn't see value in it," he said.

In the recent merger between two other telecommunications heavyweights, Alcatel SA and Lucent Technologies Inc., Lucent retained Alcatel's enterprise products business, despite having previously spun off a similar business into Avaya Inc.

Blood thinks that Avaya, Nortel Networks Corp., NEC Corp. and Cisco Systems Inc. would all make suitable and logical potential buyers for the Siemens unit.

Siemens' enterprise business employs 5,000 people in Germany, Kleinfeld said. Siemens doesn't expect to take an equity stake in a new company formed by an acquisition or merger with the enterprise business, he said.

Siemens is executing a major project to reverse a trend of declining revenues and has been selling off unprofitable units and laying off thousands of workers.