ABB Trade Note: Buy ABB on Siemen’s Restructuring Woes
Short piece out on Reuters this morning (”Siemens to regroup international operations“) citing a German daily newspaper that Siemens is in the process of restructuring its international operations into 20 regional centers:
The trains-to-lightbulbs conglomerate, which is active in more than 190 countries, is in the midst of its biggest restructuring in nearly two decades.
Loescher has set himself the task of slashing needless bureaucracy and slimming down the company to catch up with more profitable rivals such as General Electric
ABB, my favorite power grid and automation infrastructure stock, got taken down by Seimens’ unexpected profit warning on March 17th. Siemens warned that it’ll miss current quarter earnings by $1.4 Billion after having given a positive outlook in January. The warning caused a 17% slashing of Siemens’ stock (which was warranted) but ABB caught a ricochet piece of shrapnel and traded down to $23.73 at one point on March 17th, some 9% below the $26 area where it closed the day before. But ABB has already bounced back like a champ, touching $25.4 on Tuesday’s trading.
Whoever was dumping ABB shares obviously do not understand that Siemens’ problems benefits ABB. Read the rest of this entry »
