Nokia Siemens to slash 17,000 jobs to save $1.3 billion by 2013

Helsinki - Nokia Siemens will be laying off a quarter of its workforce, which equals to about 17,000 employees. This restructure is part of the company's plan to save $1.3 billion by 2013 and to narrow the gap with market leader Ericsson AB.

In a conference call Wednesday, chief executive of the joint venture owned by Nokia Corp. and Siemens AG, Rajeev Suri, confirmed that the company will eliminate approximately 17,000 jobs, which equals to roughly 23 percent of its workforce of 74,000, according to a press release. Suri noted that this will save the company $1.3 billion by 2013, which is double of its original target. Furthermore, Nokia Siemens will transition to focusing more on mobile broadband and services. “We believe that the future of our industry is in mobile broadband and services – and we aim to be an undisputed leader in these areas,” said Suri in a statement. “At the same time, we need to take the necessary steps to maintain long term competitiveness and improve profitability in a challenging telecommunications market.” Although the company plans to save money through restructuring, NSN is preparing to target information technology, real estate, administrative expenses, supply reduction and product and service procurement costs. Nokia Siemens was able to raise $1.3 billion from its parent companies in September. Suri confirmed that there wouldn’t need to be any further investment to finance the company. He added that the company is “a strong number two in mobile broadband.” Jari Honko, a Swedbank analyst, told the Wall Street Journal that the announcement of job cuts was surprising, but it was necessary. “The present chairman of the board has a task to prepare Nokia Siemens for an initial public offering. The company can't really continue with the current setup. It's not that profitable.” Following the announcement, Nokia shares were down by 1.9 percent, while Siemens was also down by 0.8 percent.