The Surprising Siemens Shakeup
Even Siemens (SI) insiders were caught off guard by the news. The Munich-based engineering and electronics giant announced on Mar. 22 that Chief Financial Officer Heinz-Joachim Neubürger is giving up his post more than a year before his contract expires. The departure of Neubürger, 53, well before he reaches retirement age is part of a major management shakeup by Siemens Chief Executive Klaus Kleinfeld as he tries to reach a self-imposed goal of getting the $92 billion conglomerate running on all cylinders by Apr. 2007.
So many people are coming and going that even seasoned Siemens watchers had trouble making sense of it all. Among those departing are company veterans such as Edward G. Krubasik, chief of the Siemens VDO auto electronics unit, and Claus Weyrich, head of research and development, both of whom are nearing retirement age.
What is clear is that one year into his tenure as CEO, Kleinfeld is looking to consoldiate his power. The changes, which will be in place by Oct. 1, also mark a new drive to boost profit at the company's troubled Information & Communications division.
Siemens is portraying the shakeup as merely a generational change and a push to internationalize top management. Yet while a company spokesman insisted that Neubürger is leaving on his own initiative, the Siemens CFO is perceived as a Kleinfeld rival.
Neubürger, who was passed over for the CEO job, enjoyed his own power base. As CFO, he was in a position to obstruct Kleinfeld's decisions.
His replacement, 48-year-old Joe Kaeser, is seen as a Kleinfeld loyalist. In his current job as chief of strategy, he had a big hand in formulating the Fit4More program, which sets tough profit targets for the company's 12 main divisions, making everything from power generation plants and factory automation equipment to light bulbs. "He will definitely be a loyal CFO and presumably more loyal than Neubürger," says one former Siemens executive.
WAIT AND SEE.
One group of people will miss Neubürger. That's analysts and fund managers. Before joining Siemens in 1989, Neubürger worked 10 years at J.P. Morgan & Co. (JPM). He spoke the investors' language and was regarded as an advocate of shareholder interests within Siemens. "We can only hope Kaeser does as good a job as Neubürger," says Roland Pitz, a longtime Siemens analyst at Munich bank HVB Group.
For now, shareholders seem to be reserving judgment: Siemens shares slipped only about 1% on the news.
The management reshuffle also represents the latest attempt to fix the unevenly performing Information & Communications division. Siemens profit in the quarter ended Dec. 31 fell 25%, to $992 million, on sales of $25.3 billion, largely because of problems at two of the division's units: Siemens Business Services, the company's IT consulting arm, and the group that makes network equipment for enterprises.
Eduardo Montes, who heads Siemens' operations in Spain, will take over responsibility for those and other Information & Communications businesses from Thomas Ganswindt, who had run the division only since September. Ganswindt's removal is being interpreted as a sign that Kleinfeld was disatisfied with the pace of change at the division, which accounts for 23% of sales. "It shows the restructuring has to move more quickly," says HVB's Pitz.
If Siemens' boss seems impatient, it's because he's running out of time to meet his own targets. Investors have long griped that the success of some divisions was always diluted by the poor performance of others, and Kleinfeld has publicly staked his career on making all 12 profitable. Currently, 10 have met profit goals or are within striking distance of doing so, Kleinfeld has said. But as any marathon runner knows, that last mile is the hardest. With a year to go, Kleinfeld is picking up the pace.