Nokia Siemens Networks' (NSN) struggles in 2009 seem to be related to a series of misses the company has had this year in attempting to realign its leadership, M&A strategy and reorganization. Arguing that it could be more powerful as a larger entity to serve the global telecom market, NSN began with the best of intentions when parents Siemens and Nokia put the pair together in 2006.
Facing a swath of new competitors and a sinking economy, NSN's troubles became more pronounced in Q2 09 when the company reported that revenues dropped 21.3 percent during the second quarter to about $4.5 billion. Not long after that, it was announced that Simon Beresford-Wylie would step down and be replaced by services unit head Rajeev Suri. But after Q3 dished another round of disappointing results, Suri decided to take action by reorganizing the company and announcing a major round of layoffs as part of a overall cost reduction program. Adding to the disappointment was the company's inability to gain a larger foothold in the North American telecom equipment market by failing to acquire Nortel's former CDMA and/or Metro Ethernet businesses.
However, these changes were of little consolation to both Nokia and Siemens (which no longer has any telecom holdings)--both reportedly wanted out of the Nokia Siemens joint venture. Supporting the venture has required both Nokia and Siemens to report writedowns of $1.35 and $2.39 billion in the NSN venture, respectively. However, in an effort to allay customer fears, both Siemens and Nokia sent a joint letter to their customers stating that they would support the unit. While that letter may be of some consolation to NSN's customers, Suri certainly has his work cut out for him to make good on his promise to increase company marketshare.
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