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Osram, Siemens Battle Over LED Strategy

Osram, Siemens Battle Over LED Strategy

On the same day that the chief executive of German lighting group Osram defended its decision to expand its LED efforts into Asia, the CEO of Siemens panned the move as too risky.

Osram made the decision last November to invest more than a billion dollars in a new LED semiconductor plant in Malaysia. The move was not well received by investors, and stock dropped more than 30 percent after the announcement. 
Many analysts feared Osram would expose itself unnecessarily to the commoditized lighting market in streets and homes. Competition in that part of the world is already extremely difficult.

Osram CEO Olaf Berlien defended his decision on Tuesday, February 16, by telling his shareholders at the Osram annual general meeting that “close consultations on strategy with the supervisory board since the start of the year has shown that rapid technological change meant there are no longer any risk-free investments.”

“Just carrying on would have been the worst option,” Berlien added. He has been in the CEO position at Osram for a little more than a year.

In a statement last month, Osram announced that it was convinced that its large shareholders would accept and embrace the new strategy. But, in response to Berlein’s comments to shareholders, a spokesman for Siemens CEO Joe Kaeser said, “the shift in strategy, as long as it takes place, would significantly increase the risk profile of Osram.” Siemens owns 18 percent of Osram.

The Siemens response is more symbolic than anything else, but it does impact the reputation of Berlien. One expert called the comment a “vote of no confidence for Berlien”.  Since the announcement to move into Asia last November, it is estimated that Siemens lost about 300 million Euros. There are rumblings that Siemens is trying to sell it’s remaining Osram stock to a Chinese investor.

Some investors are using the drop in Osram stock to build more ownership of the company. Others are hoping that Osram, which is still the only remaining global company focused only on lighting, would look more deeply into its areas of profitability, including automotive and the specialty lighting market. 




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