Nokia, Siemens to merge phone equipment units
(Reuters)
Updated: 2006-06-19 16:37 HQ IN FINLAND
Nokia Siemens Networks will have its headquarters in Nokia's home country of
Finland and be headed by Simon Beresford-Wylie, currently in charge of Nokia's
networks division. It will also have a regional headquarters in Siemens' home
city of Munich.
The tie-up of Alcatel and Lucent announced in April sparked talk of more
possible mergers and partnerships between infrastructure gear makers, who have
come under increasing pressure from Asian rivals like Huawei.
"The merger gives Nokia and Siemens scale they couldn't get otherwise. You're
going to be able to get rid of a lot of people, basically. They share common
markets," said analyst Ed Snyder of Charter Equity Research.
Nokia and Siemens said they expected to cut 10 to 15 percent of the combined
businesses' 60,000 staff over the next four years.
Analyst Snyder added, however: "I think it makes a lot of sense from the cost
side of the equation, but I don't think its going to help their growth profile
at all."
Analysts and media have linked Nokia to the Siemens communications business
or parts of it for months.
Germany's Manager Magazine reported in February that Siemens had been in
talks to sell its telecoms equipment unit Com to Nokia or to form a joint
venture, but talks failed as Nokia was only interested in Siemens' profitable
mobile networks equipment arm and not the loss-making fixed-line networks
business.
Nokia has shied away from major deals in the past despite its sizeable cash
reserves, which stood at 9 billion euros at the end of March.
Nokia's management has said repeatedly it aims to make more acquisitions in
the future and it plans to be a buyer in the consolidation of the infrastructure
sector.
The two companies will hold a news conference at 0900 GMT and a conference
call for analysts at 1300 GMT.
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