Optical/IP Networks

Siemens Mum on NSN Sale Talk

Siemens AG (NYSE: SI; Frankfurt: SIE) has declined to comment on speculation that it may sell its 50 percent stake in Nokia Networks , the joint venture that has had a bumpy ride since it began operations on April 1 this year.

NSN is one of the telecom industry's biggest vendors, with pro forma 2006 revenues of €17.1 billion (US$24.3 billion). But, like its rival Alcatel-Lucent (NYSE: ALU), its business has suffered during its initial months of trading. (See Tough Month Ahead for AlcaLu's Russo, Instant Revamp for Nokia Siemens, Nokia Siemens Suffers Merger Blues, and Nokia Siemens Opens on a Downer.)

Now weekend media reports in German business magazine WirtschaftsWoche suggest that Peter Löscher, the new CEO at Siemens, is considering the sale of various non-strategic assets, including his company's stake in NSN. (See Siemens Has New CEO.)

Siemens said it couldn't comment on such speculation, while NSN, which is believed to be close to an acquisition announcement, said it couldn't comment on what was a Siemens matter. (See Nokia Siemens in Talks to Buy Atrica.)

Siemens' share price rose slightly, by €0.25, to €96.67 on the Frankfurt exchange Monday. Nokia's stock dipped by more than 3 percent to €25.82 on the Helsinki exchange.

If Siemens were to sell its stake to Nokia, the deal would likely cost Nokia around €7 billion to €8 billion ($10 billion to $11.4 billion) in cash, reckons Dresdner Kleinwort analyst Per Lindberg, and that would use up the Finnish firm's cash pile.

Lindberg says a transfer of ownership in NSN, which he describes as "a bloated and loss-making operation in need of major restructuring," would make more sense once "full streamlining" has been completed, which would be around 2010.

That "streamlining" process includes a reduction in headcount of around 9,000 staff and outsourcing of certain development functions to partners. One such outsourcing deal was announced today, with IBM Corp. (NYSE: IBM), which will take on NSN staff and a number of R&D functions related to VOIP developments. (See NSN Outsources to IBM and Nokia Siemens to Cut 9,000.)

Speculation about a possible sale comes as Siemens announced that Löscher has quit the NSN board, a position he took up when he became CEO in late July. (See NSN Shuffles Board and NSN Announces Board Change.)

Siemens says the move has no special significance. A spokeswoman says Löscher took on the board position as part of a transfer of duties from Siemens' previous CEO, Klaus Kleinfeld, and wanted someone who has knowledge and experience of the telecom sector to take his place and represent Siemens on the NSN board.

That person is Rudi Lamprecht, who was previously in charge of Siemens' mobile infrastructure division. (See Siemens Sees Mobile Growth.)

— Ray Le Maistre, International News Editor, Light Reading

COMMENTS Add Comment
LeRoy 12/5/2012 | 3:01:43 PM
re: Siemens Mum on NSN Sale Talk Isnt the JV between Nokia and Siemens only 6 months old?

Why would Siemens make a business decision to enter into a JV, and then decide they want out 6 months later? Seems like an expensive do over to me.

digits 12/5/2012 | 3:01:41 PM
re: Siemens Mum on NSN Sale Talk The key here is the Siemens AG, one of the parent companies, has a new CEO, and he has admitted, bu handing his position on the NSN board over to a colleague, that he knows nothing about the telecom business.

He maybe has his eyes on markets where he thinks his company can dominate, and feels he could do a lot more with the $9 billion or so the NSN stake could fetch.

It's a scenario to watch, for sure, but I would imagine the odds are more in favor of Siemens hanging in there, as it would be a bit early to throw the towel in. That stake could be worth so much more in 18 months...
bollocks187 12/5/2012 | 3:00:56 PM
re: Siemens Mum on NSN Sale Talk Ray,

Siemens has a really bad record in telecoms - go abck and check the books.

They had a reasonable TDM switch but that is it.

Siemens has made repeated buy-sell flip-flops so the CEO is right to consider axeing this limb.
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