Nokia Siemens Networks is planning a major restructuring in an attempt to get into the black and to fight back against the low-cost Chinese vendors - ZTE and Huawei - which are making serious inroads into the telco equipment market. By Ian Scales.
To reduce its unit costs, NSN says it will cut its current five divisions to just three: Business Solutions, Network Systems and Global Services. It will also cut around 5000 jobs. The changes will be made at the beginning of next year.
According to NSN CEO, Rajeev Suri, as well as cutting costs the restructuring is also designed to position the company in a more strategic role - more high-level 'partner' than sales-oriented box-shifter.
On the financial side, the target is for an op-ex reduction of about €500 million by the end of 2011 and NSN plans a global personnel review with the aim of reducing the headcount by about 7-9 per cent (around 5000 redundancies out of its 64,000 workforce).
Nokia and Siemens launched their joint venture company in 2007, just in time for the recession the following year. Since its inception it has suffered large market share losses and has posted financial losses of more than 1.6 billion euros in the previous two years. It has already completed a 15 per cent reduction of its workforce at the end of 2008.
Meanwhile, as we reported last week
, Huawei and ZTE are putting in strong growth figures, with ZTE reporting a third quarter headline growth rate of 43 per cent over the same quarter last year.
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