What Siemens is doing—including Osram

Posted by tED magazine on Wednesday, March 14, 2012

By Joe Salimando

In the year ended 9/30/11, Siemens AG of Germany had (roughly, using current exchange rates) $97B in revenues and $113B in new orders. That’s from the company’s 388-page online report.

More recently, the company realigned itself – something that has to do with its focus on “infrastructure and cities.” Here’s a picture:

Among other things, Osram is posted in italics because, as the company has said since March 2011, it plans to sell the company (keeping an “anchor” percentage of Osram shares – a minority interest). Siemens is awaiting the right market conditions to conduct an Initial Public Offering of Osram stock.

In fact, in the FY11 financials, Osram is carried as a “discontinued operation.”

Osram: Value?

Why sell one of the world’s leading lighting companies? Official answer: “Independence will provide our lighting activities with the capital and flexibility they need to succeed in a fast-changing market.”

In FY11, Osram’s sales were roughly $6.6B, with after-tax earnings north of $400 million. What’s it worth? According to this 8/3/11 Bloomberg.com article, some place between $6.2B and $10.8B (using the then-current euro-dollar exchange rate, which was one euro = $1.44).

Let’s say Siemens holds onto 20% of Osram and sells off 80%, and pick the mid-point of the August valuations ($8B). The IPO could bring in $6 billion or more to Siemens’ coffers, while getting its debt (existing and future) off the company’s balance sheet.

Also on Osram: I would bet the folks at GE and Philips have half an eye on the Osram IPO, especially Philips. Lighting is roughly a third of Philips’ global revenues; it’s a smaller share for GE, of course. Even if neither company plans to spin off even a minority piece of its lighting op, having a valuation yardstick (the ongoing price of Osram stock, once it trades) will be helpful to the “C”-level execs at each company.

A few answers

How is Siemens doing in the U.S.? Q1/12 sales rose 2%, with orders up 6%. These measures compare Q1/12 with Q4/11.

FY2011 ended months ago. How is Siemens doing lately? Read the 15,000-plus words of transcripts of the 1/24/12 conference call (which included a Q-and-A) and annual general meeting.

How big is Siemens? For comparison, GE’s 2011 revenues were almost $144B; ABB’s FY11 revs were almost $38B (that’s before adding T&B). I’d say ABB is a pretty big company, wouldn’t you?

Most interesting recent news? Siemens is so big, and so interesting, that tedmag.com could provide one week’s worth of news per month just on its electrical & energy ops. Recent stuff you might want to read:

Siemens outbids Belden for RuggedCom

Siemens to hire 300 (U.S.) veterans in 2012.

“Answers” is theme of new U.S. ads (from Ogilvy & Mather).

Siemens “blindsided” by China wind boom.

“ABB CEO Hogan Bolsters Revenue with Takeovers as Siemens Waivers.”

And on Osram:

Sylvania CEO: Not Changing Direction on Efficient Light Bulbs