The announcement by Siemens that it plans to publicly list its lighting subsidiary Osram GmbH in the fall of 2011 but retain a minority stake in the company as a “long-term anchor shareholder,” put to rest for the time being the speculation that it wanted to get out of the lighting business.
“With the IPO, we want to give Osram complete entrepreneurial freedom to comprehensively further develop its leading competitive position in a lighting market being swept by technological changes,” said Siemens President and CEO Peter Löscher.
Siemens said in the press release that it wants to participate in future growth in the market for new lighting technologies. Wolfgang Dehen, currently a member of Siemens' managing board and CEO of its Energy Sector, has been appointed to head the Osram executive board. Following the transformation of Osram into a publicly listed company, he will serve as its president and CEO.
At least one Wall Street analyst had speculated that because the LED technology reshaping the lighting business is dominated by global players in the semiconductor market, Siemens wanted to get out of lighting. James Stettler, an analyst at UniCredit in London, is quoted as saying in a Bloomberg report, “The lighting industry faces huge changes. China is subsidizing local manufacturers and the business will eventually be commoditized. It makes sense to exit Osram to avoid getting out too late.”
Lighting is clearly a big and profitable business for Siemens, and Osram is already a major player in the LED market. According to Siemens, LEDs now generate 20 percent of Osram's total revenue; its total revenues were up 14 percent in 1Q 2011 to €1.28 billion (approximately $1.81 billion); and its 2010 profits grew faster than any other Siemens division. Siemens says Osram is the largest manufacturer automotive lamps and motor vehicle LEDs in the world and the second-largest lamp manufacturer in the world after Royal Philips Electronics NV.
Analysts estimate the total market for components, luminaires and lighting solutions to be roughly €45 billion (approximately $63.7 billion); luminaires and lighting systems account for over two-thirds of this market. Driven by semiconductor-based technologies like LEDs (light-emitting diodes) and OLEDs (organic light-emitting diodes), the total market is expected to grow to around €65 billion (approximately $92 billion) by 2016.
Osram has been building its position in the lighting market as of late. It recently announced that it would cross license patents with Cree Inc., Raleigh, N.C., to “accelerate the spread of LED technology in all application fields,” and help both companies develop, produce and market new products without inadvertently infringe on each others' patent rights And in February, Osram announced its plans to acquire Siteco, a European lighting fixture manufacturer.
In fiscal year 2010, sales for Osram worldwide were €4.7 billion (approximately $6.6 billion). The company employs around 40,000 people worldwide, supplies customers in some 150 countries and has 46 production facilities in 17 countries. Osram spends 5.5 percent of revenue on research and development and has been a player in the lighting market since 1909.