Nokia Siemens Networks plans to cut up to 5,760 jobs as part of a major restructuring program announced today, in a bid to revive the company's growth prospects.
The vendor plans to reduce its annual operating expenses by €500 million (US$732 million) by the end of 2011 via a host of cost-cutting measures, including a new streamlined corporate structure, workforce reductions, and reduced product procurement costs.
Just two months into the job, new CEO Rajeev Suri has wasted no time carrying out sweeping changes. The Finnish-German equipment and managed services supplier, which has been hit particularly hard by the economic slowdown this year and resulting capex belt-tightening among its big operator customers, is now taking drastic measures to turn its financial fortunes around. (See No Sign of Recovery for Nokia Siemens, Slump Slams Nokia Siemens , and Nokia Siemens Replaces Its CEO.)
As part of the international workforce reduction, Nokia Siemens plans to cut between 7 percent and 9 percent of its 64,000-strong employee base, which is anywhere from 4,480 to 5,760 jobs.
The vendor did not specify where those job cuts would be made -- neither the geography nor the business units -- because it has not yet conducted a full personnel review. But NSN noted that since "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."
The company is also on the lookout for partners and acquisitions to augment the potential to increase revenues. NSN points to its relationship with Juniper for Carrier Ethernet transport as a prime example of the kind of partnerships it's looking for.
As for acquisitions, NSN says it will pursue assets, at the right price, that "enhance the scale of existing product and service business lines and that deepen relationships with key customers."
The new structure
Nokia Siemens will streamline its business units from five to three from January 1, 2010. The vendor's existing five business divisions are Operations and Business Software; Radio Access; Broadband Connectivity Solutions; Converged Core; and Services.
Those business divisions will be folded into the following structure:
Business Solutions -- This will comprise NSN's operations and business software division plus some elements from the converged core unit such as home location registrar (HLR) functions, consulting, and systems integration, as well as subscriber data management (from its Apertio acquisition). Jürgen Walter, who is now head of NSN's converged core business, will lead the new Business Solutions unit.
Network Systems -- This unit will comprise all fixed and mobile network equipment, including Flexi base stations, core products, optical transport systems, and broadband access gear. The new division will take in the current radio access and broadband connectivity solutions, and parts of converged core business units. NSN's head of radio access, Marc Rouanne, will take over as head of the new group. (See Rouanne Reappears, Rouanne Takes 4G Role at NSN, and Rouanne Has Ericsson in His Sights.)
Global Services -- This group will provide network outsourcing nad managed services, plus "implementation of new networks and network upgrades." Current head of NSN's services business, Ashish Chowdhary, will lead the new Global Services business. (See NSN Names Services Head and Services Now 45% of NSN Revenues.)
Regarding the opex reductions, much of the savings will come from real estate, information technology, site optimization, and "overall general and administrative expenses." NSN says it will also aim to reduce "product and service procurement costs related to cost of goods sold."
NSN North America is the worst managed telecom services provider of any in the land. Employees are demoralized about the constant threat of job cuts and the multiple internal reorganizations. I formerly worked for one of NSN North American’s largest customers and the manner in which they executed the contracts we awarded was horrendously poor. I personally was repeatedly lied to by NSN sales staff about the status of the work NSN was contracted to deliver. The NSN sales teams run the projects not the project managers. Project managers are forbidden to speak to senior customer representatives for fear that the PM will speak the truth and undercut false status provided by the sales teams. NSN has much work to do to regain the trust of their customers. It needs to start by empowering their project managers to manage the projects and cut the sales staff out after contracts are awarded.
Who do you think they will buy?
Dow Jones is reporting that they may bid for Nortel's optical unit and scupper Ciena.
NBF are highlighting Bridgewater Systems as a potential NSN target.
Any other thoughts?
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