Siemens-Nixdorf Merger Eyes World Computer Market
WHILE the rest of Germany is concerned with the quick integration of its backward Eastern territories, Siemens AG, Germany's leading computer company, has set its sights on the difficult task of bringing two entirely different corporate cultures together in the newly formed partnership Siemens Nixdorf Informationssysteme AG, or SNI. Nixdorf, the hero of small businessmen that made its reputation fighting monolithic computer companies, teamed up with the Siemens's Data and Information Systems Group on Oct. 1. What was before seen as a mismatched couple, according to analysts at the Frankfurt-based consultancy Diebold Germany, could now well emerge as Europe's largest and most successful supplier of information systems - computers and related equipment. SNI is now ``magnificently prepared'' to lead the markets of Europe and ``put a little life into the American market,'' says Fritz Jagoda, Diebold's deputy managing director.
This is because the SNI product line now ranges from laptops to supercomputers - and because SNI now has the critical mass to become the first European company to compete on the American market. Siemens brings with it its strength in medium- and high-end systems. Nixdorf complements the marriage with its experience supplying machines to the banking and retail sectors, producing low-end systems, and its presence in the American market - thanks to several important contracts from customers such as Montgomery Ward & Co., and the United States Air Force.
In addition, Siemens, which controls 51 percent of SNI, is Europe's leading supplier of information systems. Last year sales totaled 61.1 billion deutsche marks (US$39.9 billion) up from 59.4 billion DM in 1988. So far this year, the company's growth rate has exceeded 20 percent. Because of its stable financial base, Siemens is well equipped to pull Nixdorf out of the red. Nixdorf reported losses of 1 billion DM (US$650 million) in 1989 - another reason it agreed to the merger in the first place. The goal for SNI in 1990-91 is sales of 13 billion DM, a work force of more than 50,000, and a formidable presence in the US market.
SNI won't reach its goals overnight, says George Verghese, Deutsche Bank Capital Markets associate director in London. He adds, however, that the company is among Europe's first to meet the three requirements a business must to survive in the information systems market in the 1990s: it is a global player (with a research partnership with IBM Corporation, for example), it offers universal systems solutions - one stop shopping for computer equipment, and it has a solid financial base.
Hans-Dieter Wiedig, SNI chairman, says the company's goal is to become a ``truly European company'' with a foothold as well in America's emerging markets. After reviewing the company's strengths, Dr. Wiedig told a Frankfurt press conference, ``If SNI doesn't make it ... no European company can.'' In the short term, Wiedig says, SNI has three priorities: the integration of SNI into a unified company, maintenance of sales, and a balance sheet in the black.
Still, some analysts say it could well be at least a year before SNI has successfully integrated its different corporate cultures and trimmed its product line down to what is profitable. Already, thoughts of making the two companies' systems completely compatible are troubling one SNI customer, because of differing standards and operating systems. Anticipating such difficulties, Siemens is adapting Nixdorf software to run on its systems.