Nokia Siemens Networks To Cut 17,000 Jobs

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Nokia Siemens Networks would like you to know that it “puts mobile broadband and services at the heart of its strategy”, and to demonstrate this they plan to fire roughly 17,000 people worldwide before the end of 2013 as part of ‘an extensive global restructuring program’. Says Rajeev Suri, CEO of Nokia Siemens Networks:

"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. At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market."

In other words, Nokia Siemens Network is apparently too much of a dog to be interesting to potential buyers. Nokia and Siemens have been trying to sell their network equipment joint venture, which was originally formed in 2007, for some time now (it sold a piece a few weeks ago).

The company says it plans to reduce its operating expenses and production overheads by 1 billion euros by the end of 2013, compared to the end of this year. Aside from laying off people, the company will also look at real estate and general expenses, as well as – ironically – IT spending.

Nokia Siemens Networks employed approximately 75,000 people as of September 30, 2011.

The full press release is below

Nokia Siemens Networks today announced its strategy to focus on mobile broadband and services and the launch of an extensive global restructuring program.

"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 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."

Strategy update

Nokia Siemens Networks will target end-to-end mobile network infrastructure and services, with a particular emphasis on mobile broadband. 

"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," said Suri. "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 Networks plans to realign its business to focus on mobile broadband (including optical), customer experience management and services. The company's Services organization will further strengthen its highly-efficient global delivery system. Business areas not consistent with the new strategy are planned to be divested or managed for value. Quality and innovation will continue to be priorities for the company, with ongoing investment in both areas.

Restructuring program

Nokia Siemens Networks targets to reduce its non-IFRS* annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011. While these savings are expected to come largely from organizational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality. 

Nokia Siemens Networks plans to reduce its global workforce** by approximately 17,000 by the end of 2013. 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. These planned measures are expected to include 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. 

Nokia Siemens Networks will begin the process of engaging with employee representatives in accordance with country-specific legal requirements to find socially responsible means to address these reduction needs. More information will be shared in impacted countries as the process proceeds. In order to reduce the impact of the planned reductions, Nokia Siemens Networks intends to launch locally led programs at the most affected sites to provide re-training and re-employment support. 

"As we look towards 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 necessary - and it is our goal to make them in a fair and responsible way, providing the support we can to employees and communities."