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Author: BizKiffer Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 243  
Subject: Siemens Med - A First Look Date: 3/20/2001 8:19 AM
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So.

Let me take a first look at the medical part of Siemens. Most of this is taken from thier own prospectus.

First of all the group is in transformation as everything in Siemens is to offer integrated solutions for efficient care giving, as they put it. Earlier they were more or less just selling products.

This is already a field where all of siemens can help with their knowledge on financing, networking, mobility, services and so on. This really shows me one of the powers of Siemens. They have a large diversity to tab into when doing new things.

From starting their restruturing they are now moving into process optimization, administartion and consulting. On top of that they are working to become an OEM supplier, meaning supplying companies that sell medical products with parts for those devices.

80% of their market is outside of Germany is global headquarter is in the US.

The Executive Management team is now between 54 and 57, which gives them some time to hold their positions as this restructuring goes on.

Sales have been.

1999 4080 million EUR
1998 3820 million EUR
1997 3875 million EUR
1996 3649 million EUR
1995 3465 million EUR

I really do not like the drop in 1998 and would still like to look at why that happened. 2000 still needs to come.

The nice thing is that EBIT has gone from 145 Million EUR to 337 million EUR from 1998 to 1999.

They are now putting a lot of weight on providing services to healthcare providers helping them deal with ever incearing cost and efficiency pressures.

As they say themselves they are "undisputed technology leader" converting their R&D investments into strong sales.

They also tried to improve world wide processes and now deliver on time over 99% while decreasing delivery times a lot (e.g. Computed Tomography Devision - 80%).

Sales are

41% Europe
40% Americas
15% Asia
4% Africa, ME, CIS

They are heavily based in the US (34%) which means that they can be hit hard by the economic slowdown there. Their estimated growth rate from 1998 to 2003 is 36% world wide. Most of this growth again coming from the US.

The medical equipment market is estimated at 18 Billion EUR with only slight growth in the next few years. More emphasis should be put, which they do, on providing integrated solutiosn.

They have partnered with SAP, Cerner and IDX for just that and I know for example that the university clinic in Aachen is now chaning to SAP. This is a big hospital. Big.

Med's biggest competitors are GE, Toshiba (they have a partnership for ultrasound equipment with them), Philips, GEC and Hitachi. There are other companies too though, which focus on just one or a few product segments.

Med's current share in the total Healthcare IT market is still small but they are leading the SAP admin field in Germany.

Here is the general ranking (not sure by what):

Global Ranking 1998
Medical equipment: Rank 1 before GE, Toshiba, Philips
X-Ray Systems: Rank 1 before Philips, GE, Toshiba
Cross-sectional imaging: Rank 2 after GE and before Toshiba and Philips
Electromedical Systems: Rank 2 behind HP and in front of Instrumentarium and Dräger.
Other: Rank 1 before Varian, Widex, Starkey

They are leading the Picture Archiving and Communications (PACS) market, which I understand as being something like a storage of X-Rays and so on. This will be the future people. It is currently worth about $300 Million but growing at 18%.

That kind of sums up my first look at them. I think their growth projections are sound and there should still be a lot of potential for synergies inside of them. I will have to read up on a few other sources (first find them of course) to see what kind of position Siemens really has and I might read GE's prospectus to see what they are saying.

At the moment I feel confident that they will have single digit growth in the higher regions as their strategy seems to be very sound and working. I think they can grow EBIT faster than market growth.

Judging from what I have seen now I would expect sales to go up and EBIT to increase.

Then I figured let's take a look. So here again the numbers including 2000.

Sales

2000 5100 million EUR
1999 4080 million EUR
1998 3820 million EUR

EBIT

2000 441 million EUR
1999 337 million EUR
1998 145 million EUR

I think that is rather nice.

Let's go into some things from the year 2000 report.

They are efficiently combining medical engineering with information and communication technology and 2/3 of their products are less than 3 years old. They also apply a new patent almost every day.

IT for healthcare growth is in the double digit range and they have taken over Shared Medical Systems in Pennsylvania which made them number one worldwide in IT solutions for healthcare (they say).

They have also aquired Acuson to offer better comlete solutiosn.

They are expending their e-health initiative (selling products and services over the Internet).

They want to be the world's most successful solutions provider in healthcare.

I am very very interested I have to say. Doing a little scuttlebut.

Oliver aka BizKiffer
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