Trouble brewing at Nokia Siemens

German vendor Siemens has confirmed that it is unsatisfied with the performance of the carrier kit joint venture it operates with Nokia.

Nokia Siemens Networks, which has only been in operation since April this year, did not get off to a good start. On the day of its launch, the Finnish-German joint venture warned of a slowdown of spending in the market and said it only expects “very slight” market growth for the mobile and fixed infrastructure and related services market this year.

In preparation for the downturn, Nokia Siemens has already said that a substantial portion of cost reductions are expected to be realised via a reduction of 10 to 15 per cent of the initial combined staff base of approximately 60,000 – or 6,000 to 9,000 over the next four years.

Estimated cost synergies of Eur1.5bn annually by 2010 are expected to come primarily from the elimination of overlapping functions, consolidation and better utilisation of sales and marketing organisations, reduction of overhead costs, sourcing benefits, and greater efficiencies in R&D, the companies said. But more recent speculation suggests that more heads may be chopped.

Siemens has confirmed to telecoms.com that at an event lat week, Siemens CEO Peter Loescher, commented on “the weak and therefore unsatisfying operating performance of the joint venture”.

Loescher is now expected to reshuffle the management at Siemens to create accountability for the business. A board meeting is planned for November 28, at which more details are expected to be revealed.