Troubled infrastructure vendor Nokia Siemens Networks (NSN) has announced plans to cut its workforce by 17,000, a huge 23 percent reduction of its global headcount. The company aims to trim staff numbers to 57,000 by the end of 2013.
"As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation," said CEO Rajeev Suri (pictured) in a statement. "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." Suri noted that the firm plans to reduce its non-IFRS annualised operating expenses and production overheads by EUR1 billion by the end of 2013, compared to the end of 2011.
The job cuts come as part of a major restructuring and strategy refocus at the world’s number three mobile network vendor. NSN will now put a particular focus on mobile broadband and services.
"Our goal is to provide the world's most efficient mobile networks, the intelligence to maximise the value of those networks, and the services capability to make it all work seamlessly," added 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."
In a statement, NSN said it plans to realign its business to focus on mobile broadband (including optical), customer experience management and services. “The company's Services organisation will further strengthen its highly-efficient global delivery system,” claimed the firm. “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.”
NSN has been struggling to keep up with the likes of market leader Ericsson and ambitious Chinese players Huawei and ZTE for some time, but the scale of today’s cuts come as a surprise. Its most recent quarter saw net sales increasing by 16 percent year-on-year to EUR3.41 billion – although down from the prior sequential quarter by 6 percent. The sales growth was “driven primarily by growth from the acquired Motorola Solutions networks assets” – without this, net sales would have increased by 3 percent, driven by growth in the company’s Global Services unit. NSN narrowed its quarterly operating loss to EUR114 million from EUR282 million.
In September it was announced that partners Nokia and Siemens were to provide EUR500 million in capital to the joint venture, with the EUR1 billion to be used to “further strengthen the company’s financial position and set the stage for strategic flexibility, productivity and innovation in areas such as Mobile Broadband and related services.”