Siemens ?accumulate?

28.11.06 - AC Research

LONDON, November 28 (newratings.com) - Analyst Henning Wagener of AC Research reiterates his "accumulate" rating on Siemens AG (SIE).

According to AC Research?s research note dated November 27 and published this morning, the company has been tangled up in a bribery scandal. The district attorney of Munich launched an investigation against a dozen Siemens employees who are accused of embezzling funds of more than ?200 million, diverting the money to illegal accounts abroad. Among other things, the money shall have been paid in connection with contracts for the 2004 Olympics. According to a report by "Süddeutsche Zeitung," former board member, Ganswindt, knew about the Siemens corruption schemes. According to newspaper reports, one of the accused already admitted to the payment of bribes. In the scope of the investigations, the police searched the Siemens headquarters in Munich and about 30 other Siemens locations last week. In this context, the offices of Siemens? head, Klaus Kleinfeld, were also searched. Although Kleinfeld was not named as a defendant, he was indicated as a witness. Siemens already announced that the company would be highly interested in the complete resolution of the incidents, offering the authorities its full cooperation.

The corruption scandal may have a rather negative effect on the company?s share price over the next few weeks, the analyst says. Fundamentally, with a closing price of ?74.60 last Friday, and a 2007/2008 P/E ratio of about 11, Siemens? stock still seems to enjoy a rather moderate rating. Considering continuing portfolio adjustments, the company?s operative profitability is expected to increase significantly in the upcoming weeks, the analyst mentions.

AC Research reiterates its "accumulate" rating on Siemens.