The new enterprise, Nokia Siemens Networks, will combine Nokia's mobile phone, infrastructure business and Siemens' carrier-related infrastructure business. By 2010, the 50:50 joint venture expects synergies of $1.9 bn US. The synergies will result from the elimination of overlapping functions and greater efficiency in R&D. According to media reports here, between 6000 and 9000 jobs will be cut. The combined company will start operations with 60.000 employees.

Based on current market share data, Nokia Siemens Networks will be the second largest company in mobile infrastructure after Ericsson/Marconi, second in services, third in fixed-line infrastructure (after Alcatel/Lucent and Cisco) and the third largest in the overall telecommunications infrastructure market.

The company will offer a broad portfolio of fixed and mobile network products and related services, including Next Generation Network convergence products, including IP Multimedia Subsystems, 2G GSM/EDGE access, 3G WCDMA/HSDPA access, fiexd-line broadband, IPTV, WiMAX and low-cost mobile voice products tailored for emerging markets.

Nokia Siemens Networks will have its operational headquarters in Helsinki, Finland. Nevertheless, three of the future five divisions of the company will be based in Munich, as well as several regional headquarters.

The CEO position will be assumed by Simon Beresford-Wylie, currently Executive Vice President and General Manager of Networks at Nokia. Peter Schönhofer, currently member of the executive board of Siemens AG Austria, will become Chief Financial Officer. The transaction closing is expected to place before January 1, 2007. It is subject to the usual customary regulatory approvals.

"This joint venture is an important step to strengthen our position in the market sustainably and to enable us to offer the best state of the art converged technologies", commented Siemens CEO Peter Kleinfeld. "The communications industry is converging, and a strong and independent Nokia Siemens Networks will be ideally positioned to help customers lower costs and grow revenues while managing the challenges of converging technology", said Nokia CEO and future Nokia Siemens Netowrks chairman Olli-Pekka Kallasuvo.

The move is only the second step to reorganize Siemens' COM division after having sold its mobile phone business to Taiwan-based vendor BenQ last year. Now, the division still comprises carrier business, enterprise business and wireless modules and is the largest division within the German electronics giant. Being also Siemens' biggest problem children for many years, the COM division in 2005 achieved sales of ¬13.1 billion ($16.4 billion). The bigger part of that division with a yearly sales of ¬9.2 billion ($11.5 billion) will be carried over to the joint venture with Nokia.

On a press conference in Frankfurt, Germany, Siemens CEO Klaus Kleinfeld also announced future plans to restructure the remainder of the COM business. According to Kleinfeld, the wireless modules business will be integrated into Siemens' Automation & Drives division (A&D) by October 2006. The far bigger enterprise networks division is planned to be spun off  but before doing so, Kleinfeld wants to strengthen the position of this activity in the global market for enterprise networks so that it will rank second  presumably after US networks giant Cisco Systems.

Kleinfeld said he is looking for a partner for the enterprise networks activities. He did not rule out that in the long term Siemens will keep only a minority stake of this future spinoff. "This is different from our deal we had with BenQ in that for the new company we have a clear goal", Kleinfeld said.

In its carrier activities, Siemens presently has a strategic cooperation with Japanese vendor NEC. This cooperation will probably remain untouched. "We see a good possibility to go forward with NEC", Kleinfeld said. But all cooperation issues will be handled by the new management team, he pointed out.

At the stock exchanges in Germany, Siemens shared climbed 8.4% by mid-day. Nokia climbed 4.3%.

By: DocMemory
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