Nokia Siemens will focus on profits, not market share, says chairman

The aggressive growth plans outlined in the past by Nokia Siemens Networks (NSN) have been dumped in favour of a drive on profitability.

NSN's new chairman, Jesper Ovesen

Ovesen

NSN's new chairman, Jesper Ovesen, told Reuters in his first interview since taking over from Olli-Pekka Kallasvuo last November that the focus would now be on profits. He added that the company would be more selective on which infrastructure deal it wins--which could impact NSN's market share, but was a risk worth taking.

"Market share is not a key parameter for me. I cannot make a living out of market share," he said. "We are going into seriously managing profitability."

This emphasis on profits could, accepts Ovesen, see NSN lose business to its rivals given that he expects the aggressive pricing tactics adopted by other suppliers to continue.

"It is difficult to change. The bargaining power right now is sitting very much with the customers who are consolidating--through network sharing, through procurement sharing," said Ovesen. "If (mobile operators) start to consolidate, as they are talking now, then perhaps there are 1-2 infrastructure players too many."

This suggestion that there might be consolidation in the supplier market has been echoed by NSN's CEO Rajeev Suri. Speaking to Capital Magazine, Suri said that he sees NSN as the forerunner of a significant restructuring process that is required throughout the wireless infrastructure industry.

"The market for mobile communication networks can't support five major suppliers," he told Capital Magazine.

"We won't be the only ones making cuts of this magnitude," added the CEO in a reference to the 17,000 jobs cuts that the company has announced will take place.

Looking to the future, Ovesen said that Nokia and Siemens both want NSN to become more independent and see an IPO as one option within a few years.

"I have a mandate to restructure the company. Our shareholders know that if we are successful in this we build a lot of value for them," Ovesen said.

"I think they have the patience to wait through to stage two in 2013 as long as we show the right progress to them and also build value here."

For more:
- see this Reuters article
- see this Capital Magazine article (sub. req.) translated via Google Translate

Related Articles:
Siemens CFO: NSN management needs 'strengthening'
Nokia, NSN deny rumors that CEO Suri will be replaced
Nokia Siemens to cut up to 4,100 workers in Germany, Finland
Nokia Siemens Q4 sales drop amid restructuring 
Nokia Siemens lets slip which units will be axed 
Nokia Siemens slashes 23% of workforce in effort to save €1B

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