The losses are mostly due to severance payments (€155m) in relation to the ongoing restructuring at SBS. The sell-off of the PRS division to Fujitsu Siemens is not fully included in the figures, hence no significant effect could be expected. The 16% decline in new orders is partly due to the fact that SBS took in a number of major outsourcing deals last year, which still need to be digested.
Siemens claims that its restructuring efforts are well underway and the effects will be visible in H2 2006, when restructuring costs are expected to be lower. Cost cutting continues: of 2,400 jobs to be cut in Germany during 2007, more than half have already been achieved.
With an objective of cutting costs by €1.5bn until the end 2007, and achieving a 5-6% profit margin, there still is a lot to do at SBS. And we fear that investors may lose patience if a significant improvement is not visible in the next quarter.