German industrial conglomerate Siemens (NYSE:SI)
has gotten a great deal more serious about streamlining its operations
around those businesses and markets where management believes they have a
long-term edge and appealing growth potential. With that, Nokia Siemens Networks is gone, Osram is about to be spun off, and other businesses like water treatment, baggage handling, and low voltage could be on the way out.
Siemens
actually held pretty good share in these businesses, so the
streamlining process doesn't really change the fact that Siemens is
typically a leader in its chosen businesses. What still has to be proven
is whether the company can significantly improve its execution and
margins. Relative to many other global industrial conglomerates, Siemens
has an unspectacular track record in margins, returns on capital, and free cash flow generation, and management needs to convince the Street that it can do better before the shares will garner a better multiple.
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