Nokia Siemens Networks said Tuesday it will lay off up to 5,700 workers globally as part of a move to cut annual costs by euro500 million ($740 million).
The mobile network equipment maker — a joint venture between Finland's Nokia Corp. and Siemens AG of Germany — said it will reduce its five business units to three by January, and strengthen its business through partnerships and acquisitions.
The savings program could include cutting 7 to 9 percent of its current global work force of some 64,000 employees, the mobile network equipment maker said.
The company has been hard hit by waning demand in the recession and cited "changes in the global economy and competitive environment" for the cost cuts. It said it will also reduce overheads, expand its portfolio and consider 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, the new chief executive officer of Nokia Siemens Networks, The Associated Press reports.
It was also reported, the cost-cutting measures will be accompanied by a thorough restructuring. Instead of five business units, the company will consist of only three units in the future: The first one will embrace NSN's ancestral network equipment business in which the mobile network equipment already dominates.
The second business segment will be named Business Solutions and embrace a range of solutions and services, including consulting and IT. These products and services will be offered to help NSN's customers to differentiate themselves in the increasingly competitive telecommunications carrier business, a NSN spokesperson said.
The third business segment, baptized Global Services contains outsourcing offerings ranging from technical support to managing and even operating complete telecommunications networks. Also IT solutions enabling NSN's customers to manage charging and billing end users are part of Global Services. This segment already generates almost 50 percent of the company's revenue.
Some activities have better chances than others to get off lightly: 3G deployment, LTE development, and subscriber data management solutions. NSN regards them as its "crown jewels", the spokesperson explained, EETimes.com reports.
CNET News quoted Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, as saying, "We recognize that we are operating in a market where customer needs are evolving fast. We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible."
Formed in early 2007, Nokia Siemens has seemed cursed from the start. Its launch was initially delayed a few months due to a bribery scandal involving several former Siemens executives.
The new company had hardly gotten off the ground when it announced it wouldn't meet financial expectations. And it's struggled since then, hurt by the economic downturn and increasing competition.
Third-quarter sales fell 21 percent to 2.8 billion euros, while its operating loss widened to 1.1 billion euros. Parent Nokia was recently forced to spend 908 million euros to write down the value of the deteriorating business, CNET News reports.