Nokia & Siemens recommit to Nokia Siemens Networks

Stuart Corner
Thursday, 14 July 2011 07:09

IT Industry - Strategy

Nokia and Siemens have abandoned plans to sell off their joint venture, Nokia Siemens Networks, saying they remain commited to the company.

The two issued a statement saying that a review for assessing private equity interest in the company had been completed. "We believe that the current shareholders are in the best position to further enhance the value of the company," said Olli-Pekka Kallasvuo, chairman of Nokia Siemens Networks.

However the story may be far from over. The Financial Times quoted a source it said had been briefed on the situation saying; "It's not necessarily going to stay a 50/50 joint venture. An initial public offering is one of the possibilities."

The joint venture, formed in 2007, has rarely been profitable and the shareholders sought to emphasis that things were improving and that they were taking steps to achieve profitability.

"Nokia Siemens Networks has made good progress in its turnaround plan, with first quarter 2011 results marking a third successive quarter of year-on-year reported net sales growth, as well as a fifth quarter of non-IFRS operating profits since it announced its change in strategy in November 2009," they said.

"Nokia Siemens Networks plans to drive further efficiency while strengthening the company's innovation capabilities in mobile broadband, services and customer experience management to drive and support customer roadmaps."

Meanwhile, according to Ovum, Nokia Siemens has "taken an aggressive strategy to protect itself by making investments in its supply chain to ensure access to key emerging [coherent optical] technologies." It says Nokia Siemens as  disadvantaged when Cisco acquired optical component maker CoreOptics in May 2010, giving Cisco a secure supply of 40G optical modules and leaving NSN with a competitor as a crucial supplier.

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