By Simon Thiel

Jan. 25 (Bloomberg) -- Siemens AG, the maker of products ranging from gas turbines to medical scanners, posted profit and sales that beat analysts' estimates, boosting the German company's stock as shareholders prepared to confront executives over bribery allegations.

Operating profit rose 51 percent to 1.63 billion euros ($2.1 billion), topping an estimate of 1.51 billion euros. Net income fell 16 percent to 788 million euros because of a European Union fine for price-fixing. Sales rose 6.1 percent to 19.1 billion euros, the company said today.

Chief Executive Officer Klaus Kleinfeld said Siemens, Europe's largest engineering company, is ``off to a strong start'' in the period. Siemens agreed yesterday to buy U.S. software maker UGS Corp. for $2.1 billion and said it will sell shares in its VDO automotive unit.

``We see the signs of a momentum shift which is pushing the company in the right direction,'' Boris Boehm, a fund manager at Nordinvest in Hamburg, which oversees $7 billion including Siemens shares. ``With the economic cycle in the upswing, Siemens is in the right sector.''

Siemens shares rose as much as 6.6 percent to 83.12 euros, their biggest gain in seven months, and traded at 82.98 euros at 1:50 p.m. in Frankfurt. Before today, they were up 11 percent in the past year, trailing a 26 percent increase in Germany's DAX 30 index.

Price-Fixing Fine

The acquisition of UGS, a supplier of production software to General Motors Corp., adds to $10 billion of takeovers since Kleinfeld took charge two years ago. A two-month bribery probe and the EU fine delayed the start of a networks venture with Nokia Oyj.

Siemens and nine other companies were fined yesterday by the European Commission, the EU's antitrust regulator, for fixing the price of equipment used to control electricity flow. Siemens said today it booked a charge of 423 million euros for the fine.

``While it's disappointing to see our net income growth reversed by an impact from events in the past, we are moving on with our operations tremendously improved year-over-year,'' Kleinfeld said in the statement. A reorganization, which has included 5,400 job cuts at the computer services division and purchases for the industrial units, is making Siemens ``more profitable and growth-oriented,'' he said.

The company's board is holding its annual shareholders' meeting at the Olympic hall in Munich.

Bribery Investigation

The median estimates of 14 analysts surveyed by Bloomberg were profit of 1.03 billion euros on sales of 18.47 billion euros. The estimates exclude the EU fine. It's the first quarter Siemens reported under International Financial Reporting Standards. Year-earlier figures were adjusted for IFRS.

``It's important for Kleinfeld to have something to put against the negative topics surrounding corruption and the EU fine today,'' said Frank Rothauge, an analyst at Sal. Oppenheim Jr & Cie. in Frankfurt, who rates the stock ``buy.''

A bribery investigation has rocked the 160-year-old company since Siemens made the allegations public in November. Police and prosecutors searched company buildings and employee homes at 30 German locations, and Siemens is reviewing the legality of 420 million euros of payments.

Kleinfeld and Chairman Heinrich von Pierer, Siemens' former CEO, say they didn't know about the bribes. They said in December that Siemens probably fell victim to a ``sophisticated'' criminal scheme by rogue employees in the telecommunications unit.

`Exceptional' Bad News

``This is a combination of bad news which is pretty exceptional,'' Kleinfeld said in an interview today, when asked about the bribery allegations and the EU cartel fine.

Kleinfeld also said he's ``very optimistic'' that the planned phone network venture between Nokia and Siemens will start in the first calendar quarter of 2007. The start of the venture was postponed because of the probe.

The investigation has grabbed Kleinfeld's attention as he works on a plan to reach profit targets that Siemens has so far missed. Kleinfeld scaled back the technology units and combined the unprofitable computer-services operations, called SBS, with the software units to form a new division.

In the first quarter, four of the 10 units didn't reach their margin target. Eight units reported rising profit. Kleinfeld reiterated today that he expects all units to reach their targets by April.

Acquisition, IPO

Siemens said earlier today it agreed to buy UGS and to sell shares in a car-equipment unit. UGS, based in Plano, Texas, makes software to plan and design production.

Siemens will retain majority control of VDO Automotive after an initial public offering, Siemens said. VDO is the world's largest maker of electronic systems that help deploy car air bags.

The share sale ``could be one of the biggest IPOs in 2007,'' Finance Chief Joe Kaeser told reporters in Munich today. He declined to give financial details and said Siemens aims to keep a ``long-term'' majority stake in the business because VDO ``will continue to grow profitably.''

The UGS acquisition comprises $1.4 billion of debt. UGS's software is used by customers including General Motors to design cars.

``After all the acquisitions in the last couple of months, we'll now focus on organic growth,'' Kleinfeld told reporters today. Kaeser said UGS might be Siemens' biggest purchase this year, ``although meaningful purchases are always possible.''

India buys cutting-edge Russian warplanes

16:47 | 24/ 01/ 2007

MOSCOW. (RIA Novosti military commentator Viktor Litovkin) - On January 22, Russian Deputy Prime Minister and Defense Minister Sergei Ivanov arrived in Bangalore on his seventh visit to India.

That same day, high-level managers from the MiG Russian Aircraft Corporation demonstrated the multi-purpose Mikoyan-Gurevich MiG-29KUB Fulcrum carrier-based fighter to Indian military experts at the Gromov Flight Research Institute in the town of Zhukovsky, outside Moscow.

This warplane, now undergoing flight tests, was developed especially for the Indian navy's aircraft carrier "Vikramaditya," formerly called the "Admiral Gorshkov," which was sold to India several years ago and is currently being upgraded at the Sevmash machine-building plant in Severodvinsk.

In all, the Indian navy is to receive 16 carrier-based fighters, including 12 single-seat MiG-29K warplanes and four two-seat MiG-29KUB fighter-trainers. Moreover, Russia would produce another 30 MiG-29K/MiG-29KUB aircraft if New Delhi confirms this order.

MiG is now completing two MiG-29Ks for subsequent certification tests and has launched production of 16 other similar warplanes at its plant in Lukhovitsy. This co-production arrangement involves several companies in Moscow, St. Petersburg, Nizhny Novgorod and Ryazan, as well as a number of French, Indian and Israeli firms.

The MiG-29K/MiG-29KUB stole the show in Zhukovsky and thrilled members of India's military establishment, TV crews and journalists.

The Indian side is quite happy about the Russian warplanes its air force and navy are receiving under bilateral contracts.

"We have known about the top-class MiG warplanes for a long time, but the MiG-29KUB that was developed by Russia and India is even better," said Cdr. Jasvinder Chauhan, India's Air Force attache in Moscow.

This is no exaggeration because Indian experts helped develop this fighter along with MiG engineers and designers, listing all the required specifications. MiG held up its part of the bargain, coming up with an advanced aircraft whose specifications are probably better than those of any similar warplane.

Indian experts helped integrate foreign computers into the MiG-29KUB's avionics, took part in developing aircraft simulators and also chose its weaponry. Nikolai Buntin, who supervised the MiG-29K/MiG-29KUB project, said Russia's air force and navy still lack any similar aircraft.

This is an important feature of Russian-Indian military-technical cooperation. Moscow supplies only the most sophisticated military equipment to New Delhi and actively involves Indian experts in research and production projects. It also sells production licenses enabling India to assemble T-90S main battle tanks, Sukhoi Su-30MKI multi-role fighters and other weapons at its own companies.

BrahMos, a well-known Russian-Indian joint venture, turns out its eponymous supersonic anti-ship missiles for the Indian navy, air force and coastal-defense units.

Moscow and New Delhi have signed defense contracts worth $9 billion to date. Last year, Russian arms sales to India accounted for about 40% of its total arms exports of $5.2 billion.

Nevertheless, Sergei Ivanov has brought new proposals for the joint production of military equipment. For instance, Moscow has suggested making RD-33MK power plants for MiG-29K/MiG-29KUB warplanes at Hindustan Aeronautics Ltd. companies under a Russian license.

The Russian side would first like to supply the first 20 ready-made power plants. India, due to receive RD-33MK kits, will subsequently mass-produce their main units and components. In all, over 80 power plants worth $300 million will be assembled.

This is a very attractive offer because New Delhi plans to upgrade its operational MiG-29 fighters with RD-29 power plants, i.e. the initial RD-33MK version.

The RD-33MK has already been overhauled three times, and its rated power has increased twofold as a result. This more fuel-efficient power plant has cut hourly operational costs by 2.5 times. Moreover, its service life has been doubled. The Indian air force can therefore use the inexpensive and cost-effective RD-33MK to upgrade previously supplied planes.

The Russian and American press has repeatedly reported that India's old MiG-21 Fishbed fighters-interceptors, now featuring Russian-made Kopye (Spear) radars, defeated the more advanced and powerful U.S. Air Force F-16 warplanes in a mock dogfight.

The Indian air force has about 100 MiG-29 fighters, as well as 135 MiG-27 Flogger aircraft that can also be fitted with RD-33MK power plants.

On January 18, the Indian government approved the RD-33MK production contract, which can be signed by Sergei Ivanov or Russian President Vladimir Putin, due to arrive in New Delhi later this week.

However, this contract has another important aspect. The MiG-35 Fulcrum new-generation multi-purpose fighter, now taking part in the Indian air force's tender for the Medium Multi-Role Combat Aircraft program, will have the same RD-33MK power plant.

The MiG-35 is vying against the SAAB JAS-39 Gripen fighter and France's Mirage-2000 warplane. The Indian air force, which plans to acquire 126 multi-role fighters, will save money if it opts for the MiG-35, because production of RD-33MK power plants will be located in India. This option would be cheaper than purchasing Boeing or Lockheed-Martin aircraft.

The Indian government's commission on tenders will make the final decision. However, Indian experts and top military leaders will be able to see two fighters with RD-33MK power plants - the MiG-29MOVT with a vectored-thrust engine and the MiG-35 - at the Air India-2007 show, due to open in Bangalore in early February.

Russia's best aircraft are now flying to India.

The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.