Siemens AG (NYSE: SI), the German engineering company, reported a $1.7 billion quarterly loss, which included a large write-down of its telecom equipment in a joint venture with Nokia (NYSE: NOK). Last year's quarterly loss was $3.72 billion. Revenues dropped by 9% to $29.74 billion this quarter from last year's fourth quarter, with the company emphasizing a challenging year ahead.

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Challenging Year Next, Troubled Past Year
Siemens' write-down last year of $5 billion included a $2.4 billion legal settlement of its corporate bribery scandal. Scandal aside, Siemens' recent results, given the industrial and manufacturing sectors in Europe and globally are still feeling the recession's effects, were not out of line with its competitors. Philips Electronics (NYSE: PHG), Siemens' large European electrical-industrial competitor, has struggled with profitability issues this year, though its operations were improving as it worked through 2009. Emerson Electric (NYSE: EMR), another diversified electrical conglomerate, also continued to have revenues off significantly in its last earnings report.

Ugly Numbers In A Good Business
Some of Siemens' segments performed well, as its energy, healthcare and industry groups raised operating profits from a year ago from $2.3 billion to $2.87 billion, a 25% increase. Though the company had a 9% dropoff in overall sales, it still had a hefty order backlog of $122 billion, though orders did decline 16% in the Q4.

What to make of these mixed numbers? Siemens and other giant industrial and manufacturing conglomerates are windows on the economy's health - in this case both the European and global economies. Siemens manufactures things such as power turbines, hospital equipment and is involved with industrial automation. These require large expenditures by other companies and industries, so the recession and the slashing of capital expenditures was certain to be felt heavily by Siemens. This should be cyclical, as in the case of ABB (NYSE: ABB), the large Swiss power company whose stock was mentioned as attractive even in this lousy earnings climate. Likewise Emerson, despite its recent revenue decline, is a well-managed company due to its long-established culture, so it should do well when recovery happens. Philips, despite its sluggish year, should benefit from the expected increase in the growing market for LED lighting technology.

Do These Companies Need A Jolt?
With most of these conglomerates heavily involved in electricity such as power and lighting, as well as manufacturing-related activities with heavy equipment used in power transmission and other industrial uses, a return to profitability should be on the horizon, as these companies' products are ultimately industrial economic necessities. Siemens predicted the first half of next year will still be particularly slow for its businesses, but at some point next year it is expected that an uptick in activity will kick in for Siemens and the others. Siemens also is involved in healthcare, as is Philips, as they manufacture diagnostic medical equipment. So with healthcare business being a long-term constant, this segment should help stabilize or even improve business results as we get into recovery.

Stock Up Yet On Siemens?
As for the stocks, with Siemens and the others, if you're investing on fundamentals, you might want to wait for a definite upturn in the business and even see some positive earnings so you can get a better gauge on how much you actually have to pay for those earnings. (For more, see Conglomerates: Risky Proposition?)

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