How Motorola acquisition pushed Nokia Siemens to cut 17,000 jobs in next 2 years


The $975 million cash deal to buy Motorola Solutions’
Networks assets is one of the reasons for Nokia Siemens Networks to axe 17,000
jobs in the next two years.


The Motorola acquisition has brought in 6,900 people to
Nokia Siemens Networks. In 2009, Nokia Siemens Networks’ manpower stood at
63,927. Its manpower increased to 66,160 in 2010, growing at 3 percent and
around 74,000 in 2011.


Also, the cash deal prompted Nokia Siemens Networks to
report substantial increase in research and development expenses.


In Q3 2011, Nokia Siemens Networks’ research and
development expenses increased 18 percent year-on-year and 4 percent
sequentially, primarily due to the addition of R&D operations relating to
the acquired Motorola Solutions networks assets as well as investments in
strategic initiatives.


Nokia Siemens Networks’ administrative and general
expenses in Q3 2011 increased 16 percent year-on-year, reflecting the higher net
sales and the addition of Motorola Solutions’ network assets. Sequentially,
Nokia Siemens Networks administrative and general expenses were virtually flat.


Nokia Siemens Networks’ sales and marketing expenses in
Q3 2011 were flat year-on-year. On a sequential basis, Nokia Siemens Networks
sales and marketing expenses decreased 6 percent, reflecting industry
seasonality and cost control initiatives.


Motorola’s main contribution was to Nokia
Siemens’ sales.
Nokia Siemens Networks’ net sales in the
third quarter 2011 grew 16 percent (q-o-q) primarily by growth from the
acquired Motorola Solutions networks assets. Excluding the acquired Motorola
Solutions networks assets, net sales would have increased 3 percent
year-on-year.


Excluding the acquired Motorola Solutions networks
assets, Nokia Siemens Networks’ net sales would have decreased 12 percent
sequentially.


Nokia, which reports income from businesses from devices,
Nokia Siemens and NAVTEQ, has been adding manpower in India and China.


Nokia manpower in India grew to 22,734 in
2010 from 18,376. In China, Nokia had 20,668 people in 2010 compared with
15,419 in 2009. Nokia has cut its resources in Finland to 19,841 in 2010 from
21,559 in 2009.

 

The cost cutting is important for the
equipment vendor as Nokia Siemens’ revenue growth from Europe in Q3 2011 was
flat. There are indications that the slowdown in European Union will hit most
of the leading telecom equipment makers’ revenue.

 

 

By Baburajan K
[email protected]