IPad May Be `Black Ship' That Shakes Up Japan's Book Industry

Bloomberg

Apple Inc.’s iPad may force Japan’s $21 billion book market to reshape pricing in the industry by historic proportions, publishing officials and analysts said.

Communications minister Kazuhiro Haraguchi and the Electronic Book Publishers Association of Japan this week compared Apple’s device to the “Black Ships” that led the country to open trade with the U.S. 157 years ago. Unlike most Western markets, Japanese publishers set retail prices and prevent discounting, allowing more than 450 companies to coexist.

The maker of the iPhone may challenge Japan’s publishing establishment in a market where e-book sales -- estimated by Nomura Holdings Inc. to be four times those of the U.S. -- come mostly from comics on mobile phones. Sony Corp. and Panasonic Corp., Japan’s two biggest consumer electronics makers, have scrapped their e-reader business in the country and Amazon.com Inc. has yet to offer its Kindle in Japanese.

“There’s a strong chance that a device like the iPad will allow authors to cut out the publishers as middlemen,” said Jun Hasebe, a Tokyo-based analyst at Daiwa Securities Group Inc. “Japanese printing, publishing and distribution industries are strongly interconnected and all three face that threat.”

Amazon.com and Barnes & Noble Inc., maker of the Nook reader, are giving publishers control over pricing to stave off competition from Apple, three publishing officials said this month. More than 7 million iPads may be sold globally in the first year, according to researcher iSuppli Corp.

Nervous About IPad

In Japan, some publishers are nervous about how the iPad may affect pricing negotiations with authors and distributors, said Mitsuyoshi Hosojima, a director at the Tokyo-based e-book association, a group formed last month by 31 members including publishers such as Kadokawa Group Holdings Inc. and Shueisha Inc.

“The iPad is coming from the U.S. and brings a new set of rules with it,” said Toshihiro Takagi, a researcher at Impress R&D in Tokyo.

Jill Tan, a Hong Kong-based spokeswoman at Apple, referred queries to U.S.-based spokeswoman Natalie Harrison, who didn’t immediately respond to e-mails. Misao Konishi, a Tokyo-based spokeswoman at Amazon, declined to comment on the company’s Kindle plans in Japan and Apple’s entry.

Unlike the U.S., Japanese bookstores don’t have the incentive to compete on price because they can return unsold books to publishers, said Takayoshi Koike, a Tokyo-based analyst at Deutsche Bank AG. The system hinders the ability to offer electronic titles cheaper than paper books, Nomura said in a Nov. 17 report.

Unique Market

“The Japanese book market is unique in that retailers must absolutely follow prices set by publishers,” Koike said. “Stores are shielded from book returns, which is why such a great number of small outlets can exist.”

For example, a book sold for 1,000 yen ($10.70) in Tokyo would typically result in the publisher receiving 630 yen, the author getting 70 yen, the distributor pocketing 80 yen and the bookstore being left with the remaining 220 yen, according to Japan’s Ministry of Economy, Trade and Industry.

“A lot of things are said about the iPad and Kindle which are what you would call ‘Black Ships,’” Minister Haraguchi said at an April 6 briefing in Tokyo.

Commodore Matthew Perry is credited by historians with helping usher in Japan’s modern era in 1853, when he opened Japan’s ports to trade by taking four black U.S. Navy steam ships to negotiate a treaty. The Japanese, shocked by the number and size of the guns aboard the ships, capitulated after seeing the “giant dragons puffing smoke,” according to the Naval History & Heritage Command’s Web site.

Giving Up

Japan has yet to open to e-readers. Buyers of Amazon’s Kindle reader are redirected to the company’s U.S. site since no Japanese-language titles are available. Tokyo-based Sony stopped selling e-readers in its home market in 2007 and Osaka-based Panasonic gave up in 2008.

Japanese consumers, accustomed to using mobile phones to surf the web, were reluctant to buy devices that can only read books, according to Sony spokeswoman Yuki Kobayashi and Akira Kadota at Panasonic.

“We’d be interested in joining the iPad platform but not at the expense of ruining pricing of our products,” said Fumiyuki Kakizawa, a Tokyo-based spokesman at Kadokawa, Japan’s biggest listed publisher. He declined to comment on the iPad’s impact on the publishing industry.

Still, the iPad offers publishers a chance to offset slumping revenue with content that combines text, video and audio, said Daiwa’s Hasebe, who covers Internet companies.

Sales of paper books and magazines in Japan fell 4.1 percent to a 21-year low in 2009, shrinking 27 percent since its 1996 peak, according to the Research Institute for Publications.

Advertising spending in Japan slumped 26 percent for magazines and 19 percent for newspapers in 2009, according to Dentsu Inc., the country’s largest advertising company.

“What sets iPad apart from a dedicated e-book reader such as Kindle is that many people will buy it for other features and end up reading books as an afterthought,” said Hasebe.

Adobe Reacts to New iPhone App Policy

Wired

 

The introduction of multitasking in iPhone OS 4 was great news for app developers and consumers, but Apple left unmentioned one policy tweak that could significantly change the App Store game.

As Wired.com reported Thursday, Apple previewed its next-generation iPhone operating system and released a beta to developers, which included a new developer’s agreement stipulating that iPhone apps must be originally programmed using Apple-approved languages (such as Objective-C).

The official iPhone OS 4 won’t be available until summer, so the exact implications of the policy change have yet to be seen. However, the consensus among several developers and tech observers is that the biggest and most obvious loser is Adobe, who has been touting a new tool called Packager for iPhone, which would enable Flash developers to easily port their apps into iPhone-native. This solution, which is set for an April 12 release as part of Adobe CS5, would partly address the lack of native Flash support for the iPhone and the iPad.

Adobe’s reaction to the news on Thursday wasn’t substantive (”We are aware of the new SDK language and are looking into it”), but Lee Brimelow, Adobe’s Flash evangelist, had some more colorful words today.

“Adobe and Apple has had a long relationship and each has helped the other get where they are today,” Brimelow wrote in his blog. “The fact that Apple would make such a hostile and despicable move like this clearly shows the difference between our two companies. All we want is to provide creative professionals an avenue to deploy their work to as many devices as possible. We are not looking to kill anything or anyone.”

Brimelow ended his post with, “Go screw yourself Apple.”

Meanwhile, Adobe has issued a filing with the Securities and Exchange Commission stating that “our business could be harmed” as “new releases of operating systems or other third-party products, platforms or devices, such as the Apple iPhone or iPad, make it more difficult for our products to perform, and our customers are persuaded to use alternative technologies,” as Bloomberg first reported.

The clause from the iPhone developer’s agreement in question is 3.3.1, which reads:

    3.3.1 — Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs. Applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iPhone OS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Documented APIs (e.g., Applications that link to Documented APIs through an intermediary translation or compatibility layer or tool are prohibited).

Apple did not return a phone call requesting comment on the new developer agreement.

Update: Kevin Lynch, Adobe’s chief technology officer, has posted his level-headed response to the revised iPhone developer agreement:

“It is up to Apple whether they choose to allow or disallow applications as their rules shift over time,” Lynch wrote. “Secondly, multiscreen is growing beyond Apple’s devices. This year we will see a wide range of excellent smartphones, tablets, smartbooks, televisions and more coming to market and we are continuing to work with partners across this whole range to enable your content and applications to be viewed, interacted with and purchased.”

Hitachi Extends the Life of Li-Ion Batteries

The Inquirer

JAPANESE ELECTRONICS MAKER Hitachi claims to have developed technology that will extend the life of lithium ion batteries.

At the moment the maximum life you will get out of a Li-Ion battery is about five years. However Hitachi claims it can make Li-Ion batteries that will last a decade if they have the wind behind them and a running start.

The batteries will even be cheaper as the design involves reducing the amount of cobalt in them. Cobalt is rare and expensive and blue.

The added longevity makes the technology more viable for a battery where removing it would be a pain. This would include storing energy from wind or solar power or powering construction gear.

Hitachi has not said when it will have products hitting the shops using this technology.

Recycling Electronics as Easy as Taking out the Trash

Computer World Canada

Ontarians have no excuse for tossing old iPods in the trash as a province-wide recycling program doubles its list of devices and drop-off locations. Torontonians get special curbside treatment and free e-waste bags for tired gadgets.

Recycling gadgets like iPods, cell phones and digital cameras just became easier for Ontario residents as a province-wide electronic recycling program led by the Ontario Electronic Stewardship (OES) moves into Phase 2 of its plan.

Forty-four electronic devices now qualify for the Waste Electrical and Electronic Equipment (WEEE) program, an industry-developed plan approved by the Ontario Ministry of the Environment and funded by electronics manufacturers and importers.

Phase 1, which launched in April 2009, allowed eco-friendly Ontarians to drop-off devices like computers, monitors, printers, disk drives, keyboards, mice, fax machines and TVs for recycling free of charge at 167 locations across the province.

Phase 2, scheduled to launch exactly one year later, extends the list of recyclable electronics to include devices like MP3 players, digital cameras, cell phones, VCRs, DVD players and radios. The number of drop-off sites has more than doubled, to more than 500 locations.

Ontarians who wish to prevent their old electronic equipment from leaking toxic residues and hazardous waste into the environment are encouraged to visit the new dowhatyoucan.ca site to find their closest OES-approved collection location.

Torontonians are the exception to the rule. Instead of visiting a drop-off site, all residents need to do is take out the trash – and make sure their electronics are placed neatly beside it.

The City of Toronto’s electronics diversion program, which has provided curbside electronics and battery recycling since September 2009, accepts all OES Phase 1 and Phase 2 products. Toronto is the first and only city in Canada to provide curbside electronics recycling to its residents.

Residents can place large electronics items on the ground (smaller items should be placed in a cardboard box) next to their garbage bins on garbage collection days. This spring, the city will provide bags specifically designated for electronics waste free of charge. Specially designated electronic waste collection containers for apartment dwellers are also in the works.

OES announced the details of Phase 2 with City of Toronto Mayor David Miller and Ontario Minister of the Environment John Gerretsen at a launch event on Tuesday at the City of Toronto Reuse Centre, one of the OES-approved locations.

Roughly one-third of all electronic waste (commercial and residential) is currently recycled in Ontario, said Gerretsen. “We want to see that grow over the next five years to at least two-thirds,” he said.

For Long, Healthy Prius Life, DIY and Skip Toyota Service

Boston Globe

 

One of the big questions when the Prius came to the North American market in 2000 was, “What’s going to happen when the batteries wear out?”

Well, today we give you Bill Passman, an electrical engineer from Lexington who bought a first-generation Prius in September of 2000 and now has driven it 170,000 miles.

“My experience has been that the car has held up very well,” he says. “Toyota designed it well, and it was warrantied for 10 years or 100,000 miles. I hit the 100,000 miles first, but up until then Toyota took care of everything.”

Everything wasn’t a lot. Oil changes are less frequent than with gas-only cars. “That’s because the electric motor takes care of the initial acceleration, which is toughest on an engine,” says Passman, who changed his “about every 10,000 miles.”

He had the same experience with brakes. “The regeneration system, which uses the car’s momentum to turn the generator that both slows the Prius and recharges the battery pack, means that light braking causes virtually no wear on the normal brake parts,” he explains. He’s done one brake job so far. Instead of a $600 job at the dealership, he had it done at an independent shop, using Toyota parts and just replacing what was worn. Cost: $150.

We like Passman because he’s like many of us, trying to figure out what’s happening with his vehicle before taking it in for service. We also like his license plate, Revolt, one the registry originally refused to issue. When he did get it, he found both front and rear plates mangled after the 9/11 attacks. “Someone didn’t get the pun and recognize a hybrid,” he says.

When his Prius’s small on-board battery failed, he investigated. “It was like a motorcycle battery that ran a lot of the car’s 12-volt accessories,” he says. “The original battery was discontinued, and Toyota wanted $600 to install the replacement and a $150 adaptor cable.”

Instead, Passman tapped into the extensive online Prius community.

“There are groups specializing in each of the four Prius generations,” he says. “For mine, I found folks who had redesigned the armrests, built backup cameras that worked with rearview mirrors, trailer hitches, and warning-light systems to help one drive more economically.”

Passman took a pass on those but jumped in when he found a fellow who’d adapted a Mazda Miata battery and marketed it with a kit containing cables and adaptor block to correct his problem. “I think it cost me $110, including shipping,” he says.

He also invested in an OBD (on board diagnostics) reader. “I got mine at an auto parts store but recently saw one at Costco for about $50,” he explains. “That gave me the error codes. I then checked them online to make sure it wasn’t something serious that required attention at the dealership.”

Recently, Passman’s engine light came on again. The error code pointed to the accelerator, something alarming given the recent Toyota recalls. However, his vehicle wasn’t included in the recall. “Toyota offered to pay 25 percent of the cost, but I could see a $2,000 repair bill for replacing the entire accelerator pedal assembly,” he says. Instead, he checked the code online and got the advice to clean the assembly. “It cost me $5 for a can of throttle-body cleaner, and that fixed my problem.’’

That fixed one problem, but another engine code was left, this one more ominous. It indicated his main battery pack was failing.

“What happens with my generation Prius is that the gasoline engine runs for three to five minutes on startup,” he says. “After that, when the computer said to switch to electric car battery, there would be a surge and then the gas engine would rev up but shift to neutral.”

Passman found that Toyota wanted $3,000 to replace the battery pack. He also could get genuine Toyota parts online (a Generation I battery pack) for about $1,900. The third option was a company called Re-Involt Technologies in North Carolina, which would replace his battery pack with Gen. II batteries for $1,475, plus shipping and an exchange.

He took this option, with the actual replacement being done by an independent shop in Seekonk. Total cost $2,015. “The new batteries are stronger than the original equipment. I averaged 54 miles [per gallon] on the way home,” he says.

What’s next? “I’m looking forward to another 10 years. The car’s still in great shape.”

Tuning Your Fuel Injectors - and Your Fuel Performance

ATV Trail Rider

 

Most ATV manufacturers are increasingly using electronic fuel injection systems. Among the many advantages are better performance, decreased fuel consumption and elimination of the need to modify carburetor injectors according to season or altitude. For those quad riders who want more from their rides and already have dealt with the usual mods (exhaust, air box...), better performance can also be achieved with certain other changes. The subject covered here will concern fuel injection controllers.

There are many products on the market, but specifications and applications can vary greatly. Product choice and price will be affected by your needs and the type of ATV. Certain products are geared for high performance and will necessitate excellent knowledge of fuel injection operation. You will need a computer to reach optimal settings or your local dealer should be equipped to do so. Even with more simple systems, where no computer is necessary, I still recommend installing an Air / Fuel ratio sensor to adjust the controller, in order to avoid damage to your ATV.

In my opinion, a very important factor is the Air / Fuel ratio, since a bad mix can cause considerable motor damage, with overheating, backfiring, difficulties in starting... In other words, whenever considering the purchase of an injection controller, one should plan the acquisition of a wideband Air / Fuel sensor. The Air / Fuel ratio is a measure that analyses the mix of air and fuel, the perfect ratio being 14.7 :1, meaning 14.7 units of air are mixed to one unit of fuel. This balance is not easy to acquire, the important point being to come as close as possible. According to your driving style and your type of vehicle, you can proceed to different adjustments. Certain racers adjust the ratio by either decreasing or increasing the quantity of fuel according to their type of racing. When decreasing the quantity of fuel compared to air, the motor will seem more nervous, more powerful, but will more easily overheat. For those riders into racing or those who like to ride at full throttle for long stretches, the tendency will be to choose a higher amount of fuel compared to air, in order to avoid engine overheating.

Injection systems installed by ATV manufacturers do not allow modifications of fuel demand when you have added performance parts to your vehicle. These aftermarket parts might necessitate a larger demand in fuel.

In other words, an injection controller will allow you to reach a good Air / Fuel ratio and thus obtain higher performance from your ATV after modification. Certain controllers will permit electronic decrease or increase in fuel demand without having to remove any parts on your ATV. It’s like changing the injectors on the carburetor without getting your hands dirty!

All controllers are programmed for a certain type of vehicle, data bases being different. Make sure to purchase the controller that suits your ATV.

How to choose your controller?

For the purists who own ATVs equipped with more aftermarket parts than stock parts and, of course, with a computer, here is a new product offered by Yoshimura, whose reputation for performance is already known. (Photo 1)

The PIM-2 and the Data Box are now available and your injection controller and Air / Fuel ratio sensor can be bought from the same manufacturer. The PIM-2 comes with 400 adjustment points, two basic settings: the first for those equipped with a Yoshimura muffler and the second for those equipped with a complete exhaust system. Different injection curves can be found on the Yoshimura Website, according to the modified parts added to your ATV. The Data Box allows you to set your own Air / Fuel ratio, it will calculate the necessary fuel adjustments for all engine speeds and all positions of the throttle, allowing the desired Air / Fuel ratio. There is no limit to progress! (Photo 2) (Photo 3)

The Dynojet Power Commander V is also a controller designed for those hard-core ATVers bent on modification. This company offers a wide range of products and also proposes an Air / Fuel ratio sensor with a new system called Autotune, which affects adjustments on the controller while you drive. Several curves are available on their internet site according to your type of ATV and your modified parts. In this company’s case, a solid reputation for quality is also well established.(Photo 4)

These two products are designed for those with considerable experience in the preparation of competition engines. The process can be very complicated for the beginner and the projected goal of such an intervention can be difficult to attain.

For those who really want to improve their ATV’s performance, but are less injection system savvy, Dynatek now offers an alternative, which does not necessitate the use of a computer for adjustments. Their injection controller uses three curves of settings based on the level of modifications done to your vehicle. Following installation, all you have to do is adjust the quantity of fuel with a potentiometer for low, medium and high engine speeds. The Dynatek controller allows you to decrease or increase the quantity of fuel to the engine on these three levels independently. (Photo 5)

For some of our readers, modifying their ATV should not be a puzzle and should not entail exorbitant expenses. The Dobeck TFI should suit their needs, being one of the most simple injection controllers. Dobeck proposes a system that allows only the increase in fuel. In my opinion, this type of product is destined to customers with less experience in engine and injection system modification who, nonetheless, wish to improve their rides. Setting suggestions are included with installation instructions. (Photo 6)

We could continue reviewing more controllers as there are many makes and models on the market, but our main objective is to help you in your choice, according to your capacities. So we have decided to play the game and have chosen to go through some testing for your benefit.

In order to do so, we equipped a Suzuki 700 KingQuad with an injection controller and an Air / Fuel ratio sensor. Our test machine has already undergone certain modifications: the exhaust and the air filter are not stuck, the air box has been modified and the clutch system has been redone by our mechanic. Starting with the Air / Fuel sensor, we choose the AFX model from NGK, reputed for the quality of its sparkplugs. The AFX is capable of reading Air / fuel ratios from 9.00 to 16.00 AFR (Air / Fuel Ratio), with a precision degree of 0.1 AFR. Installation requires drilling a hole through the exhaust and welding on the sensor support. This modification must be done by an expert welder, forget the handyman’s torch; this here is more serious business!

Figure a clearance of 4 to 5 inches for the good sized sensor. Once installed, wiring must be run from the sensor reading to the display. Also figure some space for the display wiring, which is quite long since this model is used for racing and for automobile customization. (Photo 7)

NGK provides a threaded nut that will allow you to fill the hole left when the sensor is not in use, as it is recommended not to leave the sensor in place permanently, in order to avoid premature wear. Connection of the display dial goes to the ATV battery and an added switch is necessary (not included). It is not recommended to turn on the sensor without the motor running. We follow all these installation instructions very closely and now we have to find a place to locate the display dial. The support proposed by NGK comes down to a small piece of Velcro of about 2 inches included inside the box. Bear in mind that your dial will come loose on the first bump you hit if you use the model proposed. We choose the Velcro system anyway for simplicity’s sake, but we use a more resistant commercial version. (Photo 8)

Now that our sensor, our dial, and our switch are installed, we are onto the controller. For our test, we chose the Dynatek model, simply because I consider it as a mid- range product, not necessarily lacking in quality, but because  it’s not the most simple, nor the most complicated, just in the middle of both extremes. It will allow us to increase or decrease fuel injection with its three different injection curves, without the need for a computer. Installation of this small housing is done through a few connections, without welding or important disassembly, but of course, it will necessitate certain knowledge of the electrical components of quads. As for all modifications, we recommend dealing with professionals. The controller should be installed within easy reach, which will allow for easy settings without constraints. (Photo 9 and 10)

Ready for a few tests, we first try to set the controller without using the Air / Fuel sensor to verify if its purchase is justifiable. I can confirm to you immédiate, that trying to set the adjustment of the Air / Fuel ratio by trial and error is almost impossible; how do you know if your settings are exact? Furthermore, you are risking damage to your ATV engine. In order to insure that no damage is done to our KingQuad’s motor because of overheating, we added a heat sensor with a dial placed just below the 12 Volt outlet on the front right fender, a small low cost addition (approximately $60) to verify that the KingQuad’s engine remains at the right temperature. (Photo 11 et 12)

After hours devoted to testing dozens of settings, we come to the conclusion that the Air / Fuel sensor is indispensable, if your controller is to be adjusted for good performance. I now understand why Yoshirama or Dynojet include this indispensable part in their catalogue. The sensor dial allows us to visualize whether the ratio is right. The ideal setting is between 12.5 and 13 AFR and even with this tool, the manipulation of the controller potentiometers was very touchy, since only a slight change in the position of any potentiometer will affect the ratio of the motor speed it controls.

Now here comes my favorite part of ATV modifications, on track testing! I met with Alain, our editor-in-chief on a Sunday morning for a good coffee and a fine joyride. This long awaited day is not the best weather wise, it’s raining, it’s dark out and it’s cold! But the whims of Mother Nature will not stop 2 thrill seekers such as we are. The 12 kilometer circuit where our testing occurs is beckoning us. After warming our engines, we decide to push the King a little harder. Honestly, the difference felt from the controller appears more evident at low and medium engine speeds, the engine pickups on the KingQuad are superior and we experienced no difficulty in sliding the rear just by pushing the throttle in turns. A small thrust on the throttle just before a bump will send you flying over on the back wheels without difficulty. There is so much water that we have trouble keeping our protection goggles on, water is even seeping all the way to my ears despite my helmet, but we keep on going relentlessly. I keep on checking my Air / Fuel ratio as often as possible and, to my great surprise, in spite of all this water, it still keeps on functioning properly. NGK claims the instrument resists splashing, but is not waterproof.

In short, an injection controller and an Air/ Fuel sensor are 2 necessary parts for modifying an electronic fuel injected ATV, but bear in mind that the cost of the set will be quite high, say anywhere between $500 and $800, something to consider!

Siemens Confessing to Bribes Proves Blessing to Shareholders in CFO's View

Bloomberg 

 

Joe Kaeser was six months into his new job as chief financial officer of Siemens AG in November 2006, and already, he had a list of accomplishments to show for it.

The executive had helped to arrange a joint venture between Siemens and Nokia Oyj that combined their telecommunications- network units, guided Siemens in completing its largest U.S. bond offering and converted the company’s financial statements to international standards.

What Kaeser, 52, a Siemens employee for his whole working life, didn’t know was that he was about to face his toughest challenge yet, Bloomberg Markets reports in its May 2010 issue. On Nov. 15, 2006, police raided Munich-based Siemens’s corporate offices as part of a probe into alleged bribery and kickbacks that would eventually spread to 12 countries. Chief Executive Officer Klaus Kleinfeld stepped down in 2007 after the company’s board indicated it wouldn’t renew his contract. He wasn’t charged with wrongdoing.

Siemens, a manufacturing bellwether whose products range from power turbines to medical scanners and whose operations span the globe, ended up pleading guilty to violating provisions of the U.S. Foreign Corrupt Practices Act and paying $1.6 billion in fines to U.S. and German regulators.

‘Dark Chapter’

Kaeser was never charged with wrongdoing. As a member of Siemens’s management, he was initially under suspicion, he says. After an independent investigation conducted on behalf of the Siemens audit committee found he had no involvement in the scheme, he was able to help review and fix the company’s books going back to 1999.

“That was quite a rough time,” Kaeser said in a Feb. 9 interview at the company’s New York office.

“It was a very dark chapter of Siemens history,” he says. “Looking back now, I probably would feel compelled to say it was a blessing for Siemens that it got caught then and that this company had the opportunity and the chance to turn everything around and close that one for good.”

Shareholders approved a settlement between the company and nine former executives in connection with the probe in January. Under the deal, the executives, including former CEO Kleinfeld, would pay the company damages for failing to halt a culture of using bribes in order to win contracts, largely ending the ordeal for Siemens. Two former managers are scheduled to stand trial in a Munich court next week over allegations of breach of trust and aiding bribery.

Kaeser’s challenge now is to bolster profits at the company as the global economy recovers from the worst recession since the Great Depression.

Revamp Under Loescher

Bavarian-born Kaeser, who joined Siemens in 1980 in the company’s components group, works closely with CEO Peter Loescher, a former Merck & Co. manager who became the first outsider to head Siemens when he was hired in 2007 following Kleinfeld’s departure. Loescher, 52, changed Siemens’s structure to focus on three main divisions -- industrial, health care and energy -- and replaced half of the company’s top 100 executives.

The restructuring reduced costs, enabling the company to increase so-called sector profit, or pretax operating earnings, at the three units in fiscal 2009, although revenue and orders fell amid the downturn. “That actually would suggest that the moment our business recovers and grows, we will get a lot of incremental margin dropping to the bottom line,” Kaeser says.

Siemens’ shares have benefited as the cost-cutting moves helped to bolster profits. The company’s stock climbed 71 percent in the 12 months ended April 7 to 75.06 euros, outpacing the 44 percent gain in Germany’s DAX index in the same period.

Signs of Recovery

Kaeser says he’s uncertain about when a sustained recovery will take place, particularly in manufacturing. “There are signs of hope, but there is no consistent picture of what the industrial world will do going forward,” he says.

Siemens executives were similarly cautious even after announcing that profits exceeded analysts’ expectations for the first three months of fiscal 2010. The company affirmed its guidance for sector profit from the three main divisions of 6 billion euros ($8.2 billion) to 6.5 billion euros for the full fiscal year, which will end on Sept. 30.

Kaeser said in February that Siemens may revise its profit targets when it releases results for the second quarter, at which time the outlook for the company’s industrial businesses may be clearer. He says Siemens expected to learn more about customer demand at the Hannover Messe, an international trade fair being held in Hanover, Germany, from April 19-23.

“We do expect that we’ll get a lot of insight on what our important customers are going to do, are going to intend in the next 12 to 18 months,” Kaeser says. Siemens will announce its earnings for the March quarter on April 29.

Return to Growth

Even if demand picks up this year, Kaeser says it’s unlikely that revenue will return to pre-recession levels anytime soon. “Our viewpoint of our global business is that it takes years until we are back up at levels of 2008, where we came from -- probably 2011, if not 2012,” he says.

When growth does resume, Kaeser says, the geographical mix will be different, driven by demand from China, India and Brazil rather than Europe and the U.S., as in the past. Siemens is addressing this changing reality by reviewing its operations and workforce.

In January, Siemens announced about 2,000 job cuts in Germany, where it started its business 163 years ago.

“This is in the industrial area, drive technologies as well as industrial solutions, where we know that it ain’t coming back,” Kaeser says. “And if it comes back, it’s going to be in India or China.”

More Cuts

Siemens in March said it would eliminate an additional 4,200 positions at its SIS computer-services division. The reductions come on top of more than 20,000 job cuts last year, which trimmed the company’s global head count to about 402,000. A third of that total is in Germany.

Kaeser says Loescher’s changes in 2007 helped the company weather the downturn but that long-held policies also played a part. These include never using short-term financing to fund long-term assets, a strategy that shielded the company when money markets froze in 2008. Most of its 15.8 billion euros of long-term debt matures in 2014 and beyond, according to data compiled by Bloomberg.

“We’ve always been extremely stable and rigid on that matter, and it paid off massively,” Kaeser says.

Euro Zone

Siemens has no bonds due this year. In 2011, two issues totaling 3.55 billion euros will mature, according to Bloomberg data.

Kaeser also credits European monetary union with helping to keep the region together during the financial crisis.

“I feel very positive about it because if you hadn’t had the euro in the last 18 to 24 months, it would have been a big challenge for European leaders to keep everyone together,” he says.

With credit markets now stable, Kaeser says the company may choose to refinance some debt this year while rates are low rather than risk a rise in borrowing costs in 2011. “I don’t want to be caught flat-footed a year from now with fiscal or monetary actions that negatively affect our company,” he says.