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Siemens is considered an industrial icon in Germany. However, the DAX group has long been in a state of upheaval. In the future, Siemens as a technology company would like to make even more money with software.
It all started in 1847 with the pointer telegraph. Werner von Siemens wrote industrial history and developed his company into a major player in electrical engineering. Decades later, Siemens produced turbines, trams and even household appliances. The group quickly became a global player and is even one of the founding members of the DAX.
Missed the connection in the mobile phone business
Siemens even got involved in the mobile communications business around the turn of the millennium. For many Germans, it was not a Nokia cell phone that rang, but a Siemens cell phone. But the market was too competitive, the design was too mediocre, and the production was too inefficient. In the end, Siemens was unable to get the losses in its mobile communications division under control. The new owner BenQ from Taiwan didn't bring any luck either. The Siemens share price plummeted.
A clear strategy was needed for the group. A period of corporate restructuring followed, explains Ascan Iredi, head of portfolio management at asset manager Plutos: “It was a long, long restructuring, you can't say that it happened overnight.” Several board members were busy, there were protests and job cuts.
In the end, Joe Kaeser brought about the big change, says Ascan Iredi: “Joe Kaeser was the man with the vision.” Kaeser was boss at Siemens from 2013 to 2021 and separated the medical technology and wind power and energy technology areas from the group. Both divisions were listed on the stock exchange as Siemens Healthineers and Siemens Energy.
The path to becoming a software giant
Siemens now sees the future in digitalization. Software is playing an increasingly important role. A right decision, says Daniela Bergdolt, Vice President of the German Association for the Protection of Securities Ownership (DSW): “If we see how the company is doing today, then we have to say that it makes high profits and high margins.”
Most recently, the group accelerated its transformation into a technology group with a billion-dollar takeover. Siemens swallowed up the US software company Altair for ten billion US dollars. It is the second largest takeover in the company's history and a big deal for Siemens boss Roland Busch. He has been managing the traditional company for three years.
Artificial intelligence in focus
How does Siemens want to make money in the future? If Busch has his way, Siemens should help create intelligent factories in which machines communicate with each other and optimize processes themselves. Real factories are transferred to the digital world.
Artificial intelligence is also becoming increasingly important, Busch explained to shareholders at the last general meeting: “We have been using AI for a long time, but now, together with our customers, we are bringing it into factories, power grids, hospitals and trains on a large scale.” The fantasy surrounding AI has been inspiring prices on the stock market for a long time.
The stock market is still skeptical
But that didn't help Siemens shares. Since the beginning of the year, the increase has been just six percent. Competitors are doing better, says Daniela Bergdolt from DSW. Her criticism: The market still hasn't understood what Siemens now stands for, says Bergdolt. “Perhaps Mr. Busch not only needs to work a lot internally and make good strategic decisions, but also beat the drum more for Siemens.”
Perhaps the assessment of stock market professionals will then change. At the moment it is nowhere near as high as for companies in the software industry. If Siemens wants to become a software company, the Munich-based company also has to compete with SAP & Co.
