Nokia Siemens Networks said Wednesday that it will eliminate almost 23% of its workforce in a major restructuring aimed at streamlining operations and concentrating on the mobile network infrastructure and services market.
The Finnish network equipment maker, a joint venture formed in 2006 by Finland’s Nokia (Nasdaq: NOK) and Germany’s Siemens AG (SI), is a provider of both wireless and wireline network equipment and services. Going forward, the company says it will target end-to-end mobile network infrastructure and services, with a particular emphasis on mobile broadband.
“We believe that the future of our industry is in mobile broadband and services, and we aim to be an undisputed leader in these areas,” said CEO Rajeev Suri. “At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market.”
The restructuring will cut 17,000 jobs around the world by the end of 2013. Nokia Siemens says it will eliminate its matrix organizational structure, increase the use of global delivery centers, and consolidate sites. The company says it will launch locally led retraining and re-employment support programs at the most affected sites.
Nokia Siemens says it will reduce operating expenses and production overhead by $1.3 billion (excluding special items) over the next two years. Workforce cuts will be the major contributor to these savings, but the company says it will also target real estate, information technology, procurement costs, and overall general and administrative expenses. Nokia Siemens says it will also make a significant reduction in the number of suppliers it sources.
“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,” Suri said. “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.”
Nokia Siemens’ restructuring move comes near the end of a challenging year for network equipment makers, who have seen softness in their markets as carriers hold off on spending because of global economic uncertainty, rapidly changing technology and in the U.S., uncertainty about AT&T’s proposed acquisition of T-Mobile.
