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Nokia Siemens Sheds 25% of Workforce To Stay Competitive

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Nokia Siemens employs close to 75,000 people spanning 150 countries. (Photo: O. Djokic)
Nokia Siemens employs close to 75,000 people spanning 150 countries. (Photo: O. Djokic)

BUSINESS

  • 17,000 jobs to be cut from global workforce of 75,000
  • Nokia Siemens received $1.3 billion cash injection in September
  • Microwave technology sale to DragonWave could bring in $147 million

Telecom equipment maker Nokia Siemens Networks will cut 17,000 jobs to save $1.3 billion in operating expenses and production costs by 2013. The company, second only to Ericsson on the global telecom equipment making market, will concentrate cuts on its mobile broadband sector.

The job cuts are part of a bid to become an independent company, as Nokia Siemens attempts to fight off its rivals in servicing telecommunications networks.

Nokia Siemens employs close to 75,000 people spanning 150 countries. The jobs to be axed represent close to 25% of the company’s global workforce. Close to 8% of the company’s workforce is employed in Germany. In 2010 the company generated sales of almost $255,000 per employee, representing almost 20% less than Ericsson.

Nokia Siemens continues to struggle for its independence having scrapped plans to sell part of the company to private equity outfits in July, seeking instead to boost its business and rival competitors. Nokia teamed up with Microsoft Corp to expand in the mobile phones sector but is struggling to keep the lead against Apple’s iPhone and Samsung.

In 2010, Nokia Siemens held just over 13% of the global mobile infrastructure market, bested by Ericsson, which held over 34% and Huawei, holding close to 16%.

Nokia Siemens is having a tough time staving off competition, making yearly operating losses for the past four years. The company is facing a new challenge in the form of its Asian contenders including Chinese vendors Huawei and ZTE Corp. The firm’s parent companies provided a $1.3 billion cash injection in September.

Nokia Siemens paid out $1.2 billion to acquire the lion’s share of Motorola Corp.’s wireless outfit. The deal afforded the company access to US cable companies and wireless carriers such as Verizon Wireless, ATT, and Sprint Nextel Corp, reliant on infrastructure suppliers’ technology. In August the company said it would cut up to 1,500 jobs from the Motorola units.

Nokia Siemens has units in Munich, Finland and Espoo, and makes equipment at these sites and others in China and India. The company has not yet announced which countries will see the biggest job cuts but plans to get negotiations with worker representatives underway immediately.

Nokia Siemens Takes Capital-Boosting Measures

Nokia Siemens sold its microwave technology segment to Canada-based wireless networking systems equipment maker DragonWave Inc in a deal which could bring in up to $147 million in cash and shares. DragonWave agreed to pay over $13 million in cash, and over $6.5 million in stock. The company will also take over $13 million in employee liabilities and a capital asset lease for around $6.5 million.

The company also struck an agreement with Cypress Semiconductor Corp that will remove it from a costly patent infringement lawsuit regarding GSI Technology Inc memory technology used in Cypress products.

Key Statistics – Global Smartphone Market (source: Gartner, November 2011)

  • Third quarter Smartphone sales to end users jumps over 40% compared with 2010, with 115 million units sold.
  • Third quarter Smartphone sales slows to 7% compared with second quarter figures.
  • Smartphone sales represented over 25% of overall mobile phone sales, up 1% from second quarter.

By Ellsy O'Neill for
Ellsy O'Neill is a Paris-based writer, proofreader and translator. She covers industry, culture and current affairs.

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