Nokia Siemens to Lay Off 7% to 9% of Employees
Economic pressures force Nokia Siemens to eliminate close to 6,000 jobs from its work force. The company plans to shrink its departments from five to three organizations in 2010, and plans on acquiring companies in its market in the coming year.Nokia Siemens Networks, the European telecommunications provider in the mobile, converged and managed services businesses, plans to cut 7 to 9 percent of its work force in announced restructuring and business realignment of major departments. The layoffs, dubbed by the company as "strategic work force rebalancing," will affect 4,500 to 6,000 employees worldwide out of 69,000 employees.
"As our customers make purchasing decisions, they want a partner who engages in issues well beyond a traditional discussion of technology," said Rajeev Suri, CEO of Nokia Siemens Networks, in a statement.
The company plans to trim its five business departments into three new departments-business solutions, network systems and global services-that will go into effect on the first day of 2010. While the company said it is happy with cost reduction efforts it has made in 2009, economic pressures are forcing the company to make more cuts for the remainder of the year, according to a company statement.
"As a result, Nokia Siemens Networks will target a reduction of annualized operating expenses and production overheads of ?Ã¶?Â®??500 million by the end of 2011 compared to the end of 2009. The company estimates that total charges associated with these reductions will be in the range of ?Ã¶?Â®??550 million over the course of 2010-2011," said a company statement on the changes.
"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."