Siemens still feeling pain of NSN venture

It’s not often we write about German vendor Siemens anymore, given its departure from the telecoms space. But the firm is still paying for its joint venture with Nokia, on Thursday announcing an impairment charge of €1.634bn on its partnership in Nokia Siemens Networks (NSN).

For the quarter to the end of September, Siemens recorded a net loss of €1bn, a 56 per cent increase on the €2.4bn loss reported in the same period last year. This included a charge of €1.634bn on its stake in NSN as well as a direct quarterly loss of €328m related to the NSN.

NSN is a 50/50 joint venture established in 2006 between Siemens and Finnish manufacturer Nokia at a time when the market looked like it was growing, and it’s not alone in experiencing a painful and considerable integration process.

Last month NSN said that almost 6,000 more staff face the axe as it seeks to reduce annualised operating expenses and production overheads by €500m by the end of 2011. And this is despite having fully achieved its original merger integration savings. “Changes in the global economy and competitive environment make further cost reductions necessary,” the company said. NSN estimates that total charges associated with these reductions will be in the range of €550m over the course of 2010-2011.

At the company’s capital markets day event on Wednesday this week, Nokia CFO, Timo Ihamuotila, said the company expects a flat market in euro terms for the mobile and fixed infrastructure market in 2010, but NSN is targeted to grow faster than the market.