New Siemens boss has work cut out
The choice of a little-known outsider to be Siemens' new chairman could be a way out of the damaging scandals at the German engineering giant, analysts said.
But the new CEO Peter Loescher may find it difficult to impose change on a company so steeped in - and fiercely proud of - its traditions, they said.
Furthermore, 49-year-old Loescher has never held a CEO position.
And he comes from the pharmaceuticals sector, with little experience of running a sprawling company like Siemens, which has 11 divisions and makes a wide range of products from light bulbs to power stations.
Nevertheless, investors were relieved that a replacement has finally been found for Klaus Kleinfeld, who announced at the end of April that he was quitting as the company sunk ever deeper into a quagmire of bribery and corruption allegations.
Loescher's contract will initially run for a period of five years, a company spokesman said.
The choice of someone from outside the group, wholly untainted by the current scandals, could offer a fresh start for Siemens, one of Germany's best-known and hitherto most respected companies, analysts said.
Siemens shares were among the top gainers on the Frankfurt stock exchange early on Monday, shooting up 2.7 percent to an intraday high of 95.00 euros.
They subsequently fell back in profit-taking to show a gain of 0.18 percent at 92.71 euros by late afternoon.
"Loescher is a very good choice," said UBS analyst Michael Hagmann.
"He has all the qualities one would expect of a future Siemens CEO. His international experience and previous successes will make up for his lack of knowledge of the sector."
The UBS analyst said he would therefore maintain his "buy" recommendation on the stock.
Austrian-born Loescher, a lanky skier with grey hair, is currently head of global human health at US pharmaceuticals giant Merck.
Healthcare is his specialist area, having held a number of senior management positions at former German chemicals giant Hoechst before it merged with Rhone-Poulenc to become Aventis, as well as at Amersham and the medical division of General Electric.
Siemens' supervisory board chief Gerhard Cromme praised Loescher's "upright character, his global background, his outstanding international reputation and his wide-ranging experience in business development and strategy, the financial markets and technology-related issues."
"I am convinced that Mr. Loescher has what it takes to steer Siemens through its current difficulties and into a better future," Cromme said.
The fact that Loescher has no connection with Siemens will mean his name cannot be linked with the myriad allegations of systematic corruption that have tarnished the company's image over the past six months.
Siemens is currently the object of 11 bribery and anti-trust investigations worldwide.
"That should placate the sceptical markets" and provide some positive impulses for the share, said Morgan Stanley analyst, Ben Uglow.
Nevertheless, appointing an outsider as CEO marks something of a cultural revolution for Siemens and Loescher will first have to garner support from the various different interest groups within the company, analysts said.
"Siemens is a highly complex company and it's the first time that an external CEO has been appointed. So there could be some acceptance problems. Loescher will need time," said MM Warburg analyst, Michael Bahlmann.
The DSW shareholder lobby group agreed.
"It'll be a culture shock for Siemens," DSW spokesman Juergen Kurz said.
"One of his main tasks will be to garner acceptance within the group. He'll have to forge himself an internal position of power. That'll take time."
At the same time, Loescher had the advantage that Siemens was currently in good financial shape, Kurz continued.
"He's not going to have push through more painful restructuring measures. That could put him on a good footing" with the workforce, Kurz added.
AFP
(China Daily 05/23/2007 page16)
