(Associated Press via NewsEdge) Siemens tried to blunt fierce criticism from politicians, labor unions and the media for offloading its mobile phone business to a Taiwanese firm which has failed to keep it afloat.
The German electronics and engineering conglomerate ceded its unprofitable handset business to Taiwan's BenQ last year as part of a restructuring drive under chief executive Klaus Kleinfeld.
Kleinfeld claimed at the time that he had found a 'sustainable' solution for the unit, now called BenQ Mobile.
Staff accepted sharp wage cuts and BenQ forecast at the time that the unit could break even in 2006.
However, BenQ unexpectedly pulled the plug last week, saying it could not afford to pump in more capital and that it saw only 'a very slim chance' of turning the business around.
BenQ Mobile filed for insolvency protection and a court-appointed administrator said that he had three months to try to salvage it.
With 3,000 German jobs at stake, labor leaders and politicians have accused Siemens as well as BenQ of betrayal and are putting massive pressure on the Munich-based company to step in to help.
The spat comes at a bad time for Siemens, whose image is already suffering from recently announced plans to hike the pay of Kleinfeld and other top managers by 30%.
Constantin Birnstiel, a Siemens spokesman, sought to counter the criticism, saying that Siemens might rehire some BenQ Mobile staff. He also insisted that Siemens' managers were surprised and dismayed by the turn of events.
© 2006 The Associated Press
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