Nokia Siemens Networks B.V, a 50-50 joint venture between Finnish mobile phone maker Nokia Corp. (NOK) and German telecom company Siemens AG (SI), plans to cut a total of 4,100 jobs in Germany and Finland as part of its larger extensive global restructuring program that commenced in November 2011, according to reports on Tuesday. The company is said to be talking to the unions regarding its intention to cut 2,900 jobs in Germany and 1,200 in Finland.
The restructuring program that commenced in November targets a 1 billion euro or $1.35 billion reduction in operating expense and production overheads by the end of 2013, including plans to reduce its total global workforce by 23 percent or about 17,000 over the next two years. Nokia Siemens said the reductions will allow the company to focus on its mobile network infrastructure and improve profitability.
The Finland-based joint venture, which is one of the largest telecommunications equipment suppliers in the world, has been a financial burden for both Nokia and Siemens for much of the time since its inception in April 2007.
The need to restructure stems from the company's failure to close the deal to sell a controlling stake in the joint venture after talks with several private equity firms since August 2010.
However, neither partner was seeking an early exit, but it is now facing a string of losses and a shrinking customer base. The joint venture officially ends in 2013, and both Nokia and Siemens had earlier confirmed their committed to the joint venture until then.
The company had said in November than the job cuts will emerge as it begins to align itself to the new strategy and also from a range of productivity and efficiency measures, including cost synergies from the integration of Motorola Solutions, Inc.'s (MSI) networks assets, which the company acquired in April 2011.
Nokia Siemens noted then that it intends to launch programs at the most affected sites for job cuts in order to provide re-training and re-employment support. It will also begin the process of engaging with employee representatives to conduct the job cuts in a socially responsible manner.
In Tuesday's regular trading session, NOK is currently trading at $5.03, down $0.02 or 0.40% on a volume of 10.44 million shares, while SI is trading at $95.16, up $0.42 or 0.44% on a volume of 0.17 million shares.
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