There were no real surprises in Nokia Siemens Networks (NSN) second-quarter earnings call, as the company reported a rapid dip in sales compared to previous quarters. Although the company says the overall telecom infrastructure market will see a 10 percent slowdown this year, NSN saw its revenues decline 21.3 percent during the second quarter to about $4.5 billion. An earnings preview in Dow Jones Newswires said NSN might report a second-quarter loss.
But the outlook is not completely doom and gloom. NSN's telecom services division, which provides a host of services including network outsourcing, network integration and maintenance services, is growing. Nokia's CEO Olli-Pekka Kallasvuo said during yesterday's earnings call that the services division contributes 45 percent to the company's earnings. NSN's services growth was highlighted by Brazilian telco Tele Norte Leste Participacoes S.A.'s (commonly known as Oi) announcement of a five-year, $1.55 billion managed services deal with NSN. Last summer, NSN signed an outsourcing deal with EMBARQ, now CenturyLink, to operate the ILEC's voice network.
NSN, however, is not alone in its telecom services desires. Looking for ways to cut costs, a growing number of service providers are outsourcing their operations to telecom vendors' services arms. Last week Ericsson signed a sizeable outsourcing deal with Sprint to operate the service provider's wireless and wireline networks. Similarly, Alcatel-Lucent has not only inked service deals with a number of international carriers, including Telenet and BT Global, but it also signed a joint sales partnership with Hewlett-Packard to provide products and services.
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