Nokia Siemens Networks may need to cut jobs in order to remain competitive as an independent entity, or even to file an IPO, according to sources cited by Bloomberg. The Finland-based venture ended talks this week to sell a stake of its business to buyout firms.
Remaining a standalone business means the manufacturer needs to become profitable not just to file an IPO but also to compete with the rumbling tigers that are Huawei Technologies and ZTE, as well as Alcatel-Lucent (NYSE: ALU). Asia-based manufacturers have been able to hold sway over prices because of lower manufacturing costs.
"Siemens historically over-engineered their products and in certain industry verticals people will pay for that," James Crawshaw, an equity analyst at Standard & Poor's, said in the article, "but the telecom sector isn't prepared to pay that premium for German engineering when Chinese engineering gets the job done."
When the joint venture between Nokia and Siemens was formed in 2007, the business had approximately 60,000 employees. That number has increased to 73,000 since, but the venture has been unprofitable for all but one quarter.
Nokia said it's open to other ownership options since the end of buyout talks, but did not elaborate.
- Bloomberg has this article
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