HELSINKI (AP) — Nokia Siemens Networks is slashing 17,000 jobs worldwide by 2013 — nearly 23 percent of its work force — as it strives to cut costs by euro1 billion ($1.35 billion).
The world's No. 2 mobile infrastructure maker said Wednesday the measures are part of major restructuring to make the company more flexible and efficient as it struggles against new Asian rivals.
The Finnish-German joint venture, which makes mobile networks necessary for cellphone use and communication between other mobile devices, said it would outsource services and "significantly" reduce suppliers, but gave few details.
"We will continue to push network outsourcing, we will not focus so much on field maintenance deals," CEO Rajeev Suri said. "That will allow us to use our global delivery capabilities and do remote management from our centers in India and Portugal and transform those businesses to pick up and make money."
Since Nokia Corp., the world's largest cellphone maker, joined forces with Germany's giant industrialequipment maker Siemens AG in 2006, the 50-50 joint venture has seen dwindling profits, worsened by the global economic downturn.
Last year, Nokia Siemens acquired the majority of Motorola Corp.'s wireless operations for $1.2 billion in a major thrust to gain a stronger foothold worldwide and to gain access to top American wireless carriers and cable companies, including ATT, Verizon Wireless and Sprint Nextel Corp., which depend on technology provided by infrastructure suppliers.
Strategy Analytics analyst Phil Kendall says Nokia Siemens is now being challenged by Chinese rivals, such as Huawei Technologies Ltd. and ZTE Corp.
"It's a challenging environment where the Chinese have shaken up the operational environment by originally selling cheap hardware and won business that way, but have now built up a credible reputation and become quite competent technology providers," Kendall said. "All of the big traditional Western infrastructure vendors have really had to work hard to fight off the threat."
Nokia Siemens says it aims to focus on mobile broadband and services, streamlining the organization to improve long-term competitiveness and profitability.
"We believe that the future of our industry is in mobile broadband and services. We aim to be an undisputed leader in these areas," Suri said.
He described the planned layoffs as regrettable but necessary, but gave no details.
"As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation," Suri said.
Nokia shares jumped more than 2 percent on the news but were unchanged at euro4.18 ($5.60) in late Helsinki trading.
Nokia Siemens Networks is based in Espoo, near Helsinki. It employs 74,000 employees in 150 countries.