Nokia Siemens Networks Targets Improved Financial Performance, Return to Growth
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Company Sets Goal to Reduce Annualized Operating Expenses and Production Overheads by EUR 500 Million by End 2011 Compared to End 2009 ESPOO, Finland, November 3
ESPOO, Finland, November 3 /PRNewswire-FirstCall/ -- Nokia Siemens
Networks today announced its plan to improve financial performance and return
to growth. The plan includes reorganizing the company's business units to
better align with customer needs; extensive operating expense and production
overhead reduction, including a global personnel review; ongoing purchasing
savings; expanded partnering to ensure a full portfolio of world-class
products and services; and potential acquisitions where assets would add
scale to existing product areas or customer relationships.
"As our customers make purchasing decisions, they want a partner who
engages in issues well beyond a traditional discussion of technology," said
Rajeev Suri, chief executive officer of Nokia Siemens Networks. "Business
models, innovation, growth and transformation are now very much front and
center when it comes to the selection of a technology partner - and our
planned new structure will position us well in this changing market."
Reorganization
The Company's five business units are planned to be realigned into three,
each targeting a specific customer focus area. The planned new business
units, which are expected to come into effect on January 1, 2010, are:
- Business Solutions, which will focus on helping customers generate new
revenue and differentiate from the competition by providing a faster
time to market for end-user services; enhancing billing and charging
capability; automating and simplifying processes; addressing the
challenges of convergence; and tapping into rich subscriber data to
deliver a unique customer experience. Jurgen Walter, currently head of
the company's Converged Core business unit, will assume leadership of
the Business Solutions organization.
- Network Systems, which will focus on providing both fixed and mobile
network infrastructure, including the company's innovative Flexi base
stations, core products, optical transport systems, and broadband
access equipment. Marc Rouanne, currently head of the company's Radio
Access business unit, will assume leadership of the Network Systems
organization.
- Global Services, which will focus on helping customers improve
operational efficiency through outsourcing of their non-core
activities; supporting and managing their networks with robust customer
care offerings; and ensuring fast and cost-effective implementation of
new networks and network upgrades. Ashish Chowdhary, currently head of
the company's Services business, will assume leadership of the Global
Services organization.
Rouanne and Walter will join the Company's Executive Board, effective
January 1, 2010. Chowdhary is already a member of the Executive Board and
will remain so in his new role.
Cost reductions
Despite having fully achieved the original merger integration savings
objectives of Nokia Siemens Networks, changes in the global economy and
competitive environment make further cost reductions necessary. As a result,
Nokia Siemens Networks will target a reduction of annualized operating
expenses and production overheads of EUR 500 million by the end of 2011
compared to the end of 2009. The company estimates that total charges
associated with these reductions will be in the range of EUR 550 million over
the course of 2010-2011.
The operating expense and production overhead savings are expected to
come from a wide range of areas, including real estate, information
technology, site optimization, strategic workforce rebalancing, and overall
general and administrative expenses. As part of this effort, the company will
also conduct a global personnel review which may lead to headcount reductions
in the range of about 7-9 percent of its current approximately 64,000
employees.
Specific country impact may be higher or lower than the now estimated
global 7-9 percent range and the company will only provide further details
related to this intended action when the review and planning process has
progressed and employee representatives have been involved where required. As
the stability of customer relationships is a key priority, disruption to key
customer-facing sales positions as a result of this review is expected to be
limited.
In addition to the operating expense and production overhead savings,
Nokia Siemens Networks will target an annual reduction in product and service
procurement costs related to cost of goods sold that is substantially larger
than the targeted EUR 500 million in operating expenses and production
overhead reductions. This targeted reduction is expected to position the
company to meet ongoing customer requirements for competitive pricing.
Partnerships and acquisitions
Nokia Siemens Networks will seek to further strengthen its business
through partnerships and acquisitions. The Company already has a range of
partnerships, including with Juniper Networks in the Carrier Ethernet
transport arena.
Nokia Siemens Networks will also pursue acquisitions when assets are
available and the associated purchase price of those assets provides the
appropriate value. In particular, the Company will target assets that enhance
the scale of existing product and service business lines and that deepen
relationships with key customers.
"We recognize that we are operating in a market where customer needs are
evolving fast," said Mika Vehvilainen, chief operating officer of Nokia
Siemens Networks. "We see acquisitions and expanded partnering as important
tools to help meet these needs in the fastest, most efficient way possible."
About Nokia Siemens Networks
Nokia Siemens Networks is a leading global enabler of telecommunications
services. With its focus on innovation and sustainability, the company
provides a complete portfolio of mobile, fixed and converged network
technology, as well as professional services including consultancy and
systems integration, deployment, maintenance and managed services. It is one
of the largest telecommunications hardware, software and professional
services companies in the world. Operating in 150 countries, its headquarters
are in Espoo, Finland.
Engage in conversation about Nokia Siemens Networks' aim to reinvent the
connected world at http://unite.nokiasiemensnetworks.com and talk about its
news at http://blogs.nokiasiemensnetworks.com
Find out if your country is exploiting the full potential of connectivity
at http://connectivityscorecard.org
About Nokia
Nokia (NYSE: NOK) is a pioneer in mobile telecommunications and the
world's leading maker of mobile devices. Today, we are connecting people in
new and different ways - fusing advanced mobile technology with personalized
services to enable people to stay close to what matters to them. We also
provide comprehensive digital map information through NAVTEQ; and equipment,
solutions and services for communications networks through Nokia Siemens
Networks.
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein which are not
historical facts, including, without limitation, those regarding: A) the
timing of product, services and solution deliveries; B) our ability to
develop, implement and commercialize new products, services, solutions and
technologies; C) our ability to develop and grow our consumer Internet
services business; D) expectations regarding market developments and
structural changes; E) expectations regarding our mobile device volumes,
market share, prices and margins; F) expectations and targets for our results
of operations; G) the outcome of pending and threatened litigation; H)
expectations regarding the successful completion of contemplated acquisitions
on a timely basis and our ability to achieve the set targets upon the
completion of such acquisitions; and I) statements preceded by "believe,"
"expect," "anticipate," "foresee," "target," "estimate," "designed," "plans,"
"will" or similar expressions are forward-looking statements. These
statements are based on management's best assumptions and beliefs in light of
the information currently available to it. Because they involve risks and
uncertainties, actual results may differ materially from the results that we
currently expect. Factors that could cause these differences include, but are
not limited to: 1) the deteriorating global economic conditions and related
financial crisis and their impact on us, our customers and end-users of our
products, services and solutions, our suppliers and collaborative partners;
2) the development of the mobile and fixed communications industry, as well
as the growth and profitability of the new market segments that we target and
our ability to successfully develop or acquire and market products, services
and solutions in those segments; 3) the intensity of competition in the
mobile and fixed communications industry and our ability to maintain or
improve our market position or respond successfully to changes in the
competitive landscape; 4) competitiveness of our product, services and
solutions portfolio; 5) our ability to successfully manage costs; 6) exchange
rate fluctuations, including, in particular, fluctuations between the euro,
which is our reporting currency, and the US dollar, the Japanese yen, the
Chinese yuan and the UK pound sterling, as well as certain other currencies;
7) the success, financial condition and performance of our suppliers,
collaboration partners and customers; 8) our ability to source sufficient
amounts of fully functional components, sub-assemblies, software and content
without interruption and at acceptable prices; 9) the impact of changes in
technology and our ability to develop or otherwise acquire and timely and
successfully commercialize complex technologies as required by the market;
10) the occurrence of any actual or even alleged defects or other quality,
safety or security issues in our products, services and solutions; 11) the
impact of changes in government policies, trade policies, laws or regulations
or political turmoil in countries where we do business; 12) our success in
collaboration arrangements with others relating to development of
technologies or new products, services and solutions; 13) our ability to
manage efficiently our manufacturing and logistics, as well as to ensure the
quality, safety, security and timely delivery of our products, services and
solutions; 14) inventory management risks resulting from shifts in market
demand; 15) our ability to protect the complex technologies, which we or
others develop or that we license, from claims that we have infringed third
parties' intellectual property rights, as well as our unrestricted use on
commercially acceptable terms of certain technologies in our products,
services and solutions; 16) our ability to protect numerous Nokia, NAVTEQ and
Nokia Siemens Networks patented, standardized or proprietary technologies
from third-party infringement or actions to invalidate the intellectual
property rights of these technologies; 17) any disruption to information
technology systems and networks that our operations rely on; 18) developments
under large, multi-year contracts or in relation to major customers; 19) the
management of our customer financing exposure; 20) our ability to retain,
motivate, develop and recruit appropriately skilled employees; 21) whether,
as a result of investigations into alleged violations of law by some former
employees of Siemens AG ("Siemens"), government authorities or others take
further actions against Siemens and/or its employees that may involve and
affect the carrier-related assets and employees transferred by Siemens to
Nokia Siemens Networks, or there may be undetected additional violations that
may have occurred prior to the transfer, or violations that may have occurred
after the transfer, of such assets and employees that could result in
additional actions by government authorities; 22) any impairment of Nokia
Siemens Networks customer relationships resulting from the ongoing government
investigations involving the Siemens carrier-related operations transferred
to Nokia Siemens Networks; 23) unfavorable outcome of litigations; 24)
allegations of possible health risks from electromagnetic fields generated by
base stations and mobile devices and lawsuits related to them, regardless of
merit; as well as the risk factors specified on pages 11-28 of Nokia's annual
report on Form 20-F for the year ended December 31, 2008 under Item 3D. "Risk
Factors." Other unknown or unpredictable factors or underlying assumptions
subsequently proving to be incorrect could cause actual results to differ
materially from those in the forward-looking statements. Nokia does not
undertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or
otherwise, except to the extent legally required.
http://www.nokia.com
http://www.nokiasiemensnetworks.com
SOURCE Nokia Siemens Networks
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PR Newswire. All rights reserved.
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