What's Important in the Financial World (11/8/2012)

Siemens Sitting Pretty

Siemens A.G. (NYSE: SI) released strong earnings for its fiscal fourth quarter and outlined plans to lower costs by six billion euros by 2014. At its current pace and with strategic plans on expenses, Siemens means to make itself the most well-run and well-structured conglomerate in the world. That is something its major rival, General Electric Co. (NYSE: GE), cannot claim based on its past several years of results. Siemens revenue for the fourth quarter rose 7% year-over-year to €21.703 billion, and orders rose 2% to €21.495 billion. Siemens did particularly well in two sectors that are GE strongholds:

Energy and Healthcare recorded higher fourth-quarter orders year-over-year, including strong demand at Fossil Power Generation and Diagnostics. Infrastructure & Cities saw orders fall from the prior-year level, which included a higher volume from large orders.

And Siemens results do not appear to have been hurt much by the global slowdown as it posted better results based on its most important measurements:

All Sectors reported revenue growth in the fourth quarter with tailwinds from currency translation effects. Energy and Healthcare posted double-digit increases on broad-based growth. On a geographic basis, revenue rose in all three regions, led by 14% growth in the Americas. Emerging markets on a global basis grew 3% year-over-year, and accounted for €7.416 billion, or 34%, of total revenue for the quarter.

Who says a huge company cannot do well during a recession?

Boeing Layoffs

National Employee Morale Day was celebrated at Boeing Co. (NYSE: BA) yesterday as the company reassigned a number of executives. Buried in the press release about the plans were a number of cost-cutting moves that included layoffs:

The affordability efforts continue, because additional cost reductions are needed, and are supported by reductions in executive ranks and overhead costs. By the end of 2012, Boeing Defense, Space Security expects to have 30 percent fewer executive positions than in 2010.

Perhaps because of union agreements, Boeing cannot lay off large numbers of its rank-and-file. Boeing’s recent moves have not helped its share price, which has fallen from almost $75 less than three weeks ago to just about $70 yesterday. These moves include the launch of its Dreamliner in the United States through customer United Continental Holdings Inc. (NYSE: UAL).

The Best-Selling Smartphone

Samsung posted another smartphone milestone, which showed just how much of a threat it is to Apple Inc. (NASDAQ: AAPL). The Samsung Galaxy S III is often described as the only real rival to the iPhone. Apple has done its best to stop distribution of the Samsung device through court challenges to the Galaxy line’s use of Apple patents. That action may work for a while, but Samsung engineers are smart enough to build work-arounds to those patents. According to research firm Strategic Analystics:

Samsung’s Galaxy S3 smartphone model shipped 18.0 million units worldwide during the third quarter of 2012. The Galaxy S3 captured an impressive 11 percent share of all smartphones shipped globally and it has become the world’s best-selling smartphone model for the first time ever. A large touchscreen design, extensive distribution across dozens of countries, and generous operator subsidies have been among the main causes of the Galaxy S3’s success. Apple shipped an estimated 16.2 million iPhone 4S units worldwide for second place, as consumers temporarily held off purchases in anticipation of a widely expected iPhone 5 upgrade at the end of the quarter.

Global Smartphone Shipments and Market Share by Model in Q3 2012

Global Smartphone Shipments by Model (Millions of Units) Q2 ’12 Q3 ’12
Samsung Galaxy S3 5.4 18.0
Apple iPhone 4S 19.4 16.2
Apple iPhone 5 0.0 6.0
Others 128.0 127.6
Total 152.8 167.8
Global Smartphone Marketshare by Model (% of Total) Q2 ’12 Q3 ’12
Samsung Galaxy S3 3.5% 10.7%
Apple iPhone 4S 12.7% 9.7%
Apple iPhone 5 0.0% 3.6%
Others 83.8% 76.0%
Total 100.0% 100.0%

Douglas A. McIntyre

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