Nokia Siemens to Lay Off 7% to 9% of Employees

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.

“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.”

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 €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 €550 million over the course of 2010-2011," said a company statement on the changes.

The company also announced it is looking to make acquisitions in its market, but did not unveil any names of potential targets.

“We recognize that we are operating in a market where customer needs are evolving fast,” said Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, in a statement. “We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible.”

CNET's Lance Whitney wrote the following background information on some of the recent history of Nokia Siemens and its latest earnings:

"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."