Critics hit Siemens on handset insolvency issue

Siemens tried to blunt fierce criticism from politicians, labor unions and the media for offloading its mobile phone business to a Taiwanese firm which has failed to keep it afloat, an Associated Press report said.


The Associated Press report said the German electronics and engineering conglomerate ceded its unprofitable handset business to Taiwan's BenQ last year as part of a restructuring drive under CEO Klaus Kleinfeld.


Kleinfeld claimed at the time that he had found a 'sustainable' solution for the unit, now called BenQ Mobile, the Associated Press report said.


Staff accepted sharp wage cuts and BenQ forecast at the time that the unit could break even in 2006.


However, BenQ unexpectedly pulled the plug last week, saying it could not afford to pump in more capital and that it saw only 'a very slim chance' of turning the business around, the report said.


BenQ Mobile filed for insolvency protection and a court-appointed administrator said that he had three months to try to salvage it, the report said.


With 3,000 German jobs at stake, labor leaders and politicians have accused Siemens as well as BenQ of betrayal and are putting massive pressure on the Munich-based company to step in to help.


The spat comes at a bad time for Siemens, whose image is already suffering from recently announced plans to hike the pay of Kleinfeld and other top managers by 30%, the report further said.