Tuesday, November 22, 2011

NSN's Restructuring Sees 17,000 Job Cuts, Renewed Focus on Liquid Net

Nokia Siemens Networks announced a major restructuring that will include the elimination of approximately 17,000 jobs worldwide and a renewed focus on mobile broadband. The cuts represent about 23% of NSN's current employees. The company is seeking to reduce its non-IFRS annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011. The savings are expected to come from the streamlined company size, real estate consolidation, cost synergies from the integration of Motorola's wireless assets, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers.

In a conference call, Rajeev Suri, chief executive officer of Nokia Siemens Networks, said the decision is to focus on mobile broadband rather than attempting to be an end-to-end player in network infrastructure. Optical is considered part of the mobile infrastructure offering, but wireline and other product categories would be considered non-core. NSN will either sell these non-core businesses or "manage them for value."

At this point, NSN is not disclosing where the job cuts will be made, apart from saying that the 17,000 eliminations by the end of 2013 is a global number.

Looking forward, Nokia Siemens Networks plans to leverage its Liquid Net and Liquid Transport strategies as key differentiators. The company will continue to invest and innovate in these areas, as well as to emphasize quality as a key value. Strategic interests include HSPA and LTE, signalling and data traffic management, cloud capabilities for mobile networks, OSS for mobile broadband, subscriber data management, M2M, multivendor network management, and outsourced network services.

"We believe that the future of our industry is in mobile broadband and services – and we aim to be an undisputed leader in these areas," said Rajeev Suri, chief executive officer of Nokia Siemens Networks. "At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market." http://www.nokiasiemensnetworks.com

  • Earlier this month, Nokia Siemens Networks reached an agreement to sell its microwave transport business, including its associated operational support systems (OSS) and related support functions, to DragonWave in a transaction potentially worth up to EUR 110 million. The deal provides DragonWave with an existing microwave transport business serving many top carriers worldwide, a more extensive product portfolio, an on-going agreement under which its will become the preferred, strategic supplier to Nokia Siemens Networks of packet microwave and related products, and joint R&D work with NSN. The division has sales several times larger than DragonWave, its client base is much larger, and it has more employees (360), mainly based in Milan, Italy and Shanghai, China.

  • In September 2011, Nokia and Siemens agreed to each putting EUR 500 million in new capital into their joint venture, Nokia Siemens Networks, with the aim of further strengthening the company's financial position and setting the stage for strategic flexibility, productivity and innovation in areas such as Mobile Broadband and related services. In addition, Jesper Ovesen, 54, was appointed Executive Chairman of the Board of Nokia Siemens Networks, effective immediately, replacing Olli-Pekka Kallasvuo.

  • In April 2011, Nokia Siemens Networks completed its acquisition of the majority of Motorola's wireless network infrastructure assets for US$975 in cash. The deal, which was first announced in July 2010, gave Nokia Siemens Networks incumbent relationships with more than 50 operators and strengthened its position with China Mobile, Clearwire, KDDI, Sprint, Verizon Wireless and Vodafone. Motorola's networks infrastructure business covered GSM, CDMA, WCDMA, WiMAX and LTE. Approximately 7,500 employees were expected to transfer to Nokia Siemens Networks from Motorola's wireless network infrastructure business, including R&D sites in the U.S., Russia, China and India.