Nokia Siemens Networks reported weaker fourth-quarter sales and although the vendor now has the acquisition of Motorola Solutions' (NYSE:MSI) networks business under its belt, NSN is in for a rough first quarter and 2012 as it embarks on a massive restructuring program.
In the fourth quarter Nokia Siemens reported an operating profit in the fourth quarter of $88 million, up from an operating profit of just $1.3 million in the year-ago period. However, sales fell 4 percent to $5 billion in the quarter. NSN noted in its earnings statement that since its acquisition of Motorola Solutions' closed on April 30, 2011, its fourth-quarter results are not directly comparable to those in 2010. Excluding the Motorola Solutions assets, sales would have decreased 11 percent year-over-year. NSN said that just over half its fourth-quarter revenues came from its global services business.
"The cause for the plunge in revenue is a falloff in deployment activity in India for 3G networks and a wrap up of major network modernization contracts in Europe," TBR analyst Chris Antlitz wrote in a research note. "While those trends supported topline growth for NSN, they hurt profitability because of the aggressive pricing tactics employed by Huawei and ZTE to grab market share."
Nokia CFO Timo Ihamuotila confirmed that Nokia Siemens secured a $1.69 billion credit facility. According to a Reuters report earlier this week, the company was originally hoping to raise close to $2 billion but market turmoil made that impossible and the company had to settle for the smaller amount.
NSN said in November it would undergo a major restructuring to focus on mobile broadband and that it will slash up to 17,000 jobs by the end of 2013. The vendor said it expects to take substantial charges in the first quarter related to the restructuring. Since that November announcement NSN has sold several of its business units. In December it sold its wireline business to Adtran and its WiMAX business NewNet Communication Technologies, which is backed by private equity firm Skyview Capital. In November, NSN sold its microwave business unit to DragonWave.
Ericsson (NASDAQ:ERIC) CFO Jan Frykhammar said that his company might be interested in acquiring NSN assets, but only if they were up for sale. "If they put out assets for sale and there comes official processes, I think our responsibility...is--if we are invited to have a look--[to] look at them," he told Total Telecom. Frykhammar pointed to Ericsson's $1.5 billion purchase of OSS/BSS vendor Telcordia as well as Ericsson's participation in a consortium to purchase Nortel networks' patents for $4.5 billion as examples of the company acquiring assets that add value.
However, Frykhammar stressed that Ericsson is not actively looking to acquire NSN's assets. "As a leadership team we do not speculate on consolidation," he said. "If assets are available we look at them; whether we go and acquire assets, that's completely different."
- see this release
- see this Total Telecom article
- see this Reuters article
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