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Nokia Siemens to cut 17,000 jobs, 23% of its workforce | Nokia Siemens to cut 17,000 jobs, 23% of its workforce |
(40 minutes later) | |
The struggling telecoms equipment maker Nokia Siemens Networks is cutting 17,000 jobs, 23% of its workforce. | The struggling telecoms equipment maker Nokia Siemens Networks is cutting 17,000 jobs, 23% of its workforce. |
The cuts from its 74,000-strong workforce should help reduce costs by some 1bn euros ($1.35bn; £860m), href="http://www.nokiasiemensnetworks.com/news-events/press-room/press-releases/nokia-siemens-networks-puts-mobile-broadband-and-services-at-the-heart-of-its-strategy" >the company said in a statement. | |
The loss-making venture, owned by Finland's Nokia and Germany's Siemens, has faced stiff competition from rivals such as Huawei and Ericsson. | The loss-making venture, owned by Finland's Nokia and Germany's Siemens, has faced stiff competition from rivals such as Huawei and Ericsson. |
The owners are considering listing the venture as a separate company. | The owners are considering listing the venture as a separate company. |
"This is a big move. I believe the goal is an Initial Public Offering [flotation]. That cannot be done with the current structure and operation models," said Jari Honko, an analyst at Swedbank. | "This is a big move. I believe the goal is an Initial Public Offering [flotation]. That cannot be done with the current structure and operation models," said Jari Honko, an analyst at Swedbank. |
Nokia Siemens chief executive Rajeev Suri described the planned layoffs as "regrettable but necessary". | Nokia Siemens chief executive Rajeev Suri described the planned layoffs as "regrettable but necessary". |
"As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation," Mr Suri said. | "As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation," Mr Suri said. |
"These changes didn't come out of the blue. When a new chairman was appointed earlier, they signalled that a strategy update would be coming," said Sami Sarkamies an analyst at Nordea Bank. | |
Cuts of this size were likely to be carried out in different phases said Sarkamies. | |
He said they were likely to have a positive effect on the company's share price. | |
"Savings of 1bn euros could translate into a ten-cent earnings per share improvement for Nokia," explained Sarkamies. | |
Traders use earnings per share as a key measure to value companies listed on the stock exchange. | |
The firm, which is a joint venture between Finland's Nokia and Germany's Siemens, has said the restructuring program will involve cuts across operations worldwide. | The firm, which is a joint venture between Finland's Nokia and Germany's Siemens, has said the restructuring program will involve cuts across operations worldwide. |
Shares in Nokia Siemens rose more than 2% to 4.27 euro after the announcement. | Shares in Nokia Siemens rose more than 2% to 4.27 euro after the announcement. |
Nokia Siemens has been squeezed by market leader Ericsson and increasing competition from Chinese firms Huawei and ZTE. | Nokia Siemens has been squeezed by market leader Ericsson and increasing competition from Chinese firms Huawei and ZTE. |
It is not alone in the industry in announcing large-scale job cuts. | It is not alone in the industry in announcing large-scale job cuts. |
French rival Alcatel Lucent cut 12,500 jobs in 2007 while Ericsson cut 5,000 jobs in 2009 and a further 1,500 in 2010. | |
Struggling Canadian giant Nortel eventually filed for bankruptcy protection. | Struggling Canadian giant Nortel eventually filed for bankruptcy protection. |
In its last trading statement the firm posted a 16% rise in sales to 3.4bn euro ($4.6bn; £2.9bn) which it said was "driven primarily by growth from the acquired Motorola Solutions networks assets". | In its last trading statement the firm posted a 16% rise in sales to 3.4bn euro ($4.6bn; £2.9bn) which it said was "driven primarily by growth from the acquired Motorola Solutions networks assets". |
In September, Nokia and Siemens had announced 500m euro of additional funding for the joint venture to strengthen the firm's financial position. | In September, Nokia and Siemens had announced 500m euro of additional funding for the joint venture to strengthen the firm's financial position. |