Nokia Siemens Networks, reeling from weaker sales and declining market share, said it may cut as many as 5,760 jobs as part of a broad restructuring and cost-cutting program. The program includes reducing the number of its business units from five to three and lowering its procurement costs.
The company said it aims to reduce expenses by $733 million annually by the end of 2011 compared with the end of 2009. Additionally, the cuts in procurement costs will be "substantially larger" than other cuts, and are being made to "meet ongoing customer requirements for competitive pricing." That could bring the total cost cuts to nearly $1.46 billion. Nokia Siemens said it may cut 7 percent to 9 percent of its 64,000 employees, and that some countries may see job losses higher or lower than that range.
Just as Nokia reshuffled its front office and reorganized its handset business in the wake of its $834 million net loss in the third quarter, it now appears that Nokia Siemens--Nokia's joint venture with Germany's Siemens--is restructuring after a period of weak performance. In the third quarter, NSN's sales slumped 21 percent to $4.16 billion. The company had an operating loss of $1.64 billion in the quarter, compared with an operating loss of $1.48 million in the year-ago quarter. The company's market share also is expected to decline more in 2009 than Nokia and Nokia Siemens had previously anticipated.
In addition to the cost cuts, Nokia Siemens said it would streamline its business structure, actions scheduled to go into effect Jan. 1. The company plans to reorganize into three business units: business solutions, network systems and global services. Jürgen Walter, currently head of the company's converged core unit, will run business solutions; Marc Rouanne, currently head of the vendor's radio access unit, will run the network systems business; and Ashish Chowdhary, currently the company's services chief, will run the global services business.
NSN also said it is open to making acquisitions when "assets are available and the associated purchase price of those assets provides the appropriate value."
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