NSN sees Q2 sales drop 8%, continues with restructuring plan

Nokia Siemens Networks reported another quarterly drop in sales and a negative operating margin, but its operating margin was improved from the first quarter. The company also said it remains on track with its restructuring program.

The network infrastructure vendor reported an operating loss of $278.3 million, wider than the operating loss of $136 million it had in the year-ago period, though the company noted that because it completed the acquisition of Motorola Solutions' (NYSE:MSI) networks business on April 30, 2011, its second-quarter results are not directly comparable to last year.. Nokia Siemens reported a negative operating margin of -6.8 percent, which was worse than the year-ago period of -3 percent but substantially better than the -34.1 percent it had in the first quarter of 2012.

Overall, the company's sales dipped 8 percent year-over-year in the quarter to around $4.1 billion, which was 13 percent higher than the $3.64 billion it had in the first quarter of 2012. Nokia Siemens reported year-over-year drops in sales in every region except Asia Pacific.

Nokia Siemens said the overall drop in sales was primarily due to its strategy to focus on mobile broadband, customer experience management and services. On a year-over-year basis, Nokia Siemens said it saw a decline in sales of infrastructure equipment as well as a slower carrier investment environment in certain markets, including Europe, and that this was partially offset by a slight increase in sales of services.

The vendor is undergoing a major restructuring to focus on mobile broadband and plans to slash up to 17,000 jobs by the end of 2013 to save $1.3 billion, and said it remains on track with that plan. By the end of the second quarter, the company said it had cut the number of its employees by around 10 000 compared with the end of 2011, resulting in significant structural savings in non-IFRS research and development, sales and marketing, and administrative and general expenses.

During the second quarter T-Mobile USA named NSN, along with Ericsson (NASDAQ:ERIC), as the two primary vendors for its $4 billion network modernization plan, which includes an upgrade to LTE. Nokia Siemens also won a contract in the quarter from Softbank in Japan to deploy HSPA+ and LTE.

Looking ahead to the third quarter, the company said it expects its non-IFRS operating margin to be above the second quarter 2012 level of 0.8 percent.

For more:
- see this Nokia release
- see this Bloomberg article

Special Report: Wireless in the second quarter of 2012

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