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Nokia Siemens slashes 17,000 jobs, shifts market focus

Posted: 24 Nov 2011 ?? ?Print Version ?Bookmark and Share

Keywords:job cuts? mobile broadband? telecommunications market?

Nokia Siemens Networks will lay off almost a quarter of its global workforce or around 17,000 employees to cut the company's annual costs by $1.35 billion (?1 billion). Nokia Siemens is a joint venture between Finland's Nokia Corp. and Germany's Siemens AG.

The restructuring program also comes after the company has announced that they are realigning its business to focus on mobile broadband (including optical), customer experience management and services. Business areas not consistent with the new strategy are planned to be divested or managed for value. The joint venture is slowly gearing up to be an independent entity.

"We believe that the future of our industry is in mobile broadband and servicesand we aim to be an undisputed leader in these areas," said Rajeev Suri, chief executive officer of Nokia Siemens Networks. "At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market."

These planned reductions are expected to be driven by aligning the company's workforce with its new strategy as well as through a range of productivity and efficiency measures. The restructuring program is expected to include the elimination of the company's matrix organizational structure, site consolidation, transfer of activities to global delivery centers, consolidation of certain central functions, cost synergies from the integration of Motorola's wireless assets, efficiencies in service operations and company-wide process simplification.

"As we look toward the prospect of an independent future, we need to take action now to improve our profitability and cash generation," said Suri. "These planned reductions are regrettable but necessaryand it is our goal to make them in a fair and responsible way, providing the support we can to employees and communities."

Market watchers were expecting Nokia to opt out of the joint venture as it is falling behind in the market. Nokia is now working with Microsoft Corp. in developing mobile phones.

According to Phil Kendall of Strategy Analytics, Nokia Siemens is also facing challenges from Asian rivals such as China's Huawei and ZTE Corp.

"The Chinese have shaken up the operational environment by originally selling cheap hardware and won business that way, but have now built up a credible reputation and become quite competent technology providers," Kendall said in a report by the Associated Press. "All of the big traditional Western infrastructure vendors have really had to work hard to fight off the threat."

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