Nokia Siemens Networks (NSN) will cut up to 5,800 jobs as it tries to rein in costs in the face of weak demand and heavy competition from Chinese vendors.
New CEO Rajeev Suri said yesterday the company aimed to cut annual operating expenses and production overheads by €500 million ($734 million) over the next two years.
It also expects to make savings in product and service procurement costs “substantially larger” than the €500 million already targeted that would allow the company to meet “customer requirements for competitive pricing. ”
NSN, the no.2 vendor by sales, posted a €1.1 billion loss in the third quarter, with revenue down 21% from last year.
Suri has has consolidated NSN’s five business units into three – business solutions, network systems and global services – and says it will would actively seek further acquisitions and partnerships, such as its current carrier Ethernet alliance with Juniper Networks.
NSN said it expected to cut 7%-9% of its current workforce of 64,000. Other savings would comes from real estate, IT, site optimization and general and administrative expenses.
It estimated that charges associated with the cut in headcount would be approximately €550 million in 2010-2011.
Suri said: “Business models, innovation, growth and transformation are now very much front and center when it comes to the selection of a technology partner – and our planned new structure will position us well in this changing market.”
COO Mika Vehvilainen said the company sees see acquisitions and expanded partnering as important tools to help meet customers’ needs in the “fastest, most efficient way possible.”