Siemens set for the best

In just over a year working as CEO, Klaus Kleinfeld has already proved himself. Few people thought that Klaus Kleinfeld would really shine as president of the Siemens conglomerate. After all, he was just 47 when he got the job last Janaury, and having spent several years in America, he didn’t possess the dour German corporate attitude that was considered a prerequisite for the job. Well, what a difference a year makes. Few people thought that Klaus Kleinfeld would really shine as president of the Siemens conglomerate.

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By  Richard Agnew Published  February 12, 2006

Siemens set for the best|~||~||~|In just over a year working as CEO, Klaus Kleinfeld has already proved himself. Few people thought that Klaus Kleinfeld would really shine as president of the Siemens conglomerate. After all, he was just 47 when he got the job last Janaury, and having spent several years in America, he didn’t possess the dour German corporate attitude that was considered a prerequisite for the job. Well, what a difference a year makes. Kleinfeld was in the Middle East last week on his first official tour of the region. He had some explaining to do: for example, why has net income fallen by 10% in the third quarter of last year? Why are two of Siemens' divisions still making huge losses? And why take so long to come to the Gulf? Kleinfeld was able to deliver impressive answers to all his critics. The financially disastrous mobile phones division has been sold to BenQ, and US$1.5 billion of cost savings are underway in under-performing parts of the group. As to why he hasn’t been here before, the answer is that Siemens was never really ready. It is now though, which is why sales orders for Siemens in the Gulf rose by 70% last year. Much of this is down to the excellent Siemens One concept he introduced, which has helped the 12 separate divisions that make up the entire group actually act as one. It was something that was so obvious, and it should have been done a long time ago; nobody bothered, or at least not until Kleinfeld turned up. For once, they are all pulling in the same direction. And the markets are impressed. Despite the drop in net income, the considerable rise in sales orders has helped push the company’s shares up 6% in recent days. It is a well-deserved vote of confidence, and much of the credit must go to Kleinfeld personally. His no-nonsense style of talking, his can-do attitude and general charm has won many new friends, not to mention lucrative contracts. He is a man on the rise: at long last, Siemens can mount a serious challenge to General Electric. And no region will benefit more than the Gulf, where the company’s presence is growing by the day.||**||About time|~||~||~|I have long been a stern critic of General Motors boss Rick Wagoner. You only need to look at the latest results to see why: the company posted a fourth-quarter net loss of US$4.8 billion in 2005, from US$99 million the previous year. In November, it announced a restructuring plan involving 30,000 job losses and nine plant closures, blaming losses on high labour costs, reduced market share, and stagnant SUV sales. The terrible figures have led some analysts to even suggest that world’s best known motor company may need to go into bankruptcy, repeating the path of many American airline companies in the nineties. And most of all, there has been resentment at Rick Wagoner’s annual US$2.2 million basic salary. But for once, Rick Wagoner and other executives at the company have done the right thing. They have agreed to salary and bonus reductions, as part of a money-saving scheme aimed at improving the struggling auto giant’s financial situation. He should be applauded. For now.||**||Depositing credit where due|~||~||~|It is normally Mashreqbank that steals all the glory when it comes to the banking industry, so I am delighted to be able to heap praise on a credible rival: Dubai Bank. Launched in late 2002, the Dubai Bank had initially planned to break even by 2006. However, the bank’s performance has exceeded every single forecast, or even dream. It has achieved considerable growth not only in its core commercial business, but more importantly, in the newly established merchant banking and capital markets businesses. And the figures show you why. Last week Dubai Bank announced a net profit of US$28 million for 2005. The bank’s net profit growth rate, over the first half results, represented a massive 121% increase. The past year has represented a huge turning point for the bank. Its quality of service and growing brand and reputation can only be good for the rest of the banking industry.||**||

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