Nokia Siemens Networks to slash staff by quarter

Wed Nov 23, 2011 11:27am EST
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By Tarmo Virki, European Technology Correspondent

HELSINKI (Reuters) - Nokia Siemens Networks, the world's second-largest maker of mobile phone network equipment, is axing 17,000 jobs, nearly a quarter of its workforce, to help save about 1 billion euros ($1.35 billion) a year.

NSN, which has struggled to make a profit since being set up in 2007, did not say where it would make the cuts, part of wider changes that analysts said looked aimed at gearing up the company for an initial public offering.

NSN was formed by Finnish group Nokia and German conglomerate Siemens in the hope of building enough scale to lead an industry dominated by Swedish company Ericsson and, increasingly, by Chinese entrants.

It has faced aggressive pricing from rivals and an economic downturn that has forced telecoms companies to cut spending.

The job cuts form part of plans for the company to focus on mobile networks and move out of fixed-line infrastructure.

"This is a big move. I believe the goal is an IPO," said Swedbank analyst Jari Honko. "That cannot be done with the current structure and operation models."

Nordea analyst Sami Sarkamies said the savings from "drastic restructuring measures" would boost Nokia's annual earnings per share by up to 0.10 euro.

NSN raised 1 billion euros in late September from its parents to strengthen its balance sheet. Chief Executive Rajeev Suri said the venture would not need any further financing at this stage.   Continued...