NSN stands by cost cutting strategy

Rethink
Nokia Siemens has placed all its hopes on a streamlined strategy focused only on mobile broadband, but it believes that market will be a challenging one in 2013.
 
The vendor, which has shown strong signs of a turnaround - based on its narrower focus - in recent quarters, predicted this week that the mobile broadband market will remain flat in 2013 as operators continue to exercise strong cost control.
 
Chairman Jesper Ovesen wrote, in his introduction to the company's annual report, that recent progress in cost cutting and and divestment of non-core units must continue, amid a difficult climate for sales growth.
 
“Maintaining this progress is essential as we do not expect a significant change in market conditions in 2013,” he wrote, raising fears that NSN's nascent recovery is too reliant on cost reduction rather than organic growth.
 
“Despite strong underlying fundamentals, particularly continued data traffic growth, we expect the mobile broadband market to be relatively flat, as operators maintain tight control of both capital and operating expenses and macro-economic conditions remain uncertain,” Ovesen continued. “As a result of this market environment, we expect competition to remain challenging.”
 
However, he insists that the joint venture has taken the right decisions and is now in a good position to weather the storms of economic downturn, and come out the other side “on the right path to becoming a sustainably profitable business.”
 
NSN's 2012 operating profit, before extraordinary items was €822 million, though after restructuring charges and other costs, it made an operating loss of €741 million.
 
Siemens late last week revealed that it will likely seek an exit to the NSN joint venture this year. A shareholder pact prohibiting Siemens and Nokia from selling their respective stakes expires last month.

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