Nokia Siemens to slash 23% of its workforce
Will focus more tightly on mobile broadband, divest non-core units and cut costs by a further €1bn by 2013
Published: 23 November, 2011
READ MORE: People/Management | Nokia Siemens Networks
Nokia Siemens plans to slash its workforce by a further 17,000 jobs, a huge 23% of its total payroll, bringing that figure down to 57,000 by the end of 2013.
"As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation," said CEO Rajeev Suri in a statement. "These planned reductions are regrettable but necessary." The cuts are part of a broader cost reduction program, which aims to shrink annual operating expenses and production overheads by €1bn between the end of 2011 and the end of 2013.
While NSN is still the world's third largest network infrastructure maker, it has seen its margins squeezed by the competitive tussle with leaders Ericsson and Huawei, and earlier this year failed to get hoped-for new investment from private equity partners. It aims to focus more heavily on mobile broadband systems, managed services and on shifting its differentiation from commoditized network hardware towards software and network intelligence.
"Our goal is to provide the world's most efficient mobile networks, the intelligence to maximize the value of those networks, and the services capability to make it all work seamlessly," added Suri. "Despite the need to restructure parts of our company, our commitment to research and development remains unchanged, with investment in mobile broadband expected to increase over the coming years."
As well as seeking to be at the cutting edge of the 3G+ and 4G waves, with its highly flexible Liquid RAN and core platforms, NSN also plans to boost the efficiency of its services operations. Meanwhile, businesses which are no longer core to the new cornerstones of mobile broadband, optical and services will be "divested or managed for value". NSN recently sold its microwave backhaul unit to DragonWave, for instance.
Nonetheless, the scale of the new cuts surprised almost everybody, after a solid if uninspiring third quarter, when net sales were up 16% year-on-year (but almost entirely because of the acquisition of Motorola Solutions' networking arm). NSN also narrowed its quarterly operating loss to €114m from €282m.
The joint venture received a cash injection of €1bn from its parent companies in September, but conditions of that were understood to be a commitment to simplify its organization, streamline locations and functions, and achieve greater efficiencies from the Motorola merger.
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