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Nokia, Siemens to merge some units

(Reuters)
Updated: 2006-06-19 08:44

NUMBER-FOUR RANKING

In the overall telecoms infrastructure market, the joint venture will rank behind industry leader Cisco Systems Inc., the merged Alcatel-Lucent, and Swedish-based Ericsson by total sales.

The combination of Nokia's networks unit and the Siemens carrier business in fixed and mobile networks will offer some savings, and up to 9,000 jobs are due to be cut.

It will also help the companies get ahead in converged systems, the technology that allows fixed-line and mobile operations to operate over the Internet.

"The boundaries are blurring," said Nokia's Simon Beresford-Wylie, who will be chief executive of the venture.

Siemens has been searching for years for a solution for its telecoms equipment unit Com, after offloading its loss-making mobile phones division to Taiwan's BenQ last year.

The Siemens Com unit made an operating profit of 454 million euros last fiscal year, or 3.5 percent of its sales of 13.1 billion euros. But Siemens will keep, for now, its Enterprise business which tailor-makes telecoms systems for firms, though it is actively pursuing a divestment.

Nokia's networks division had an operating margin of 13 percent last year and the joint venture will target a margin in "double digits" already in the first year.