Nokia Oyj and Siemens AG agreed to combine their telecommunications network equipment units to close the gap with market leader Ericsson AB and reduce costs for research and development, personnel and purchasing.
The merger would create a company with annual sales of about 15.8 billion euros (US$19.9 billion) and will be equally owned by Espoo, Finland-based Nokia and Munich-based Siemens. The new company, called Nokia Siemens Networks, aims to cut as many as 9,000 of its 60,000 employees to save about 1.5 billion euros a year by 2010, the companies said in an e-mailed statement yesterday.
The new company would have a 21 percent of the US$65 billion wireless equipment market, while Sweden's Ericsson controls about 26 percent, according to Credit Suisse Group.
Siemens chief executive officer Klaus Kleinfeld has sold the German engineering company's handset business and is pulling out of unprofitable units after earnings slumped during his 16-month leadership.
"It's a good solution for Siemens and for the industry as a whole because it means less competition," said Michael Vieker, who manages about US$460 million at Muenchener Kapitalanlage GmbH in Munich, including Siemens shares. "There is too much capacity and we haven't seen any major consolidation so far because the players were too strong to go bankrupt."
The new entity will be run by Nokia executive Simon Beresford-Wylie in the role of CEO. Beresford-Wylie, a 48-year-old Australian, last year became the head of Nokia's network unit. The transaction is expected close before Jan. 1, next year, and is subject to regulatory approvals.
Nokia Siemens Networks will have its headquarters in Helsinki, be registered in the Netherlands and three of its five future divisions will be based in Munich.
Excluding restructuring charges, both Nokia and Siemens said that they expect the partnership to have a "positive" effect on their earnings per share by the end of next year.
Nokia's network division had sales of 6.56 billion euros last year, and an operating profit of 855 million euros, for an operating margin of 13 percent. The network unit accounts for about a fifth of Nokia's total sales.
Siemens's communications unit had sales of 13.1 billion euros in the fiscal year through September, and operating profit of 454 million euros, making it less profitable than Nokia's division.
Operating profit at the communications division slumped 75 percent in the quarter through March as costs rose and demand for networks declined, leading to an operating margin of 0.8 percent.
Makers of mobile-phone networks have in past months bought manufacturers of fixed-line telephone equipment as wireless and traditional calls are increasingly converging, meaning cellphones can be used on the move and then connect to a fixed network when at home or in the office.
Nokia and Siemens said the combination will allow them to offer customers products for so-called quadruple play, a combination of mobile and fixed telephone calling, Internet access and television services.
Siemens also said yesterday that it will "actively pursue the consolidation in the enterprise networks industry" and that the company "is in negotiations with several interested parties to execute this strategy."
EMBRACE CHANGE: Jensen Huang told NTU graduates that instead of worrying about AI itself, they should worry that people with expertise in AI would be taking their jobs Artificial intelligence (AI) is redefining the computer industry, and Taiwanese companies could play a major role in replacing the world’s traditional computers as they are the foundation of the industry, Nvidia Corp cofounder and CEO Jensen Huang (黃仁勳) said in Taipei yesterday. Huang made the remarks while giving the keynote speech at National Taiwan University’s (NTU) commencement ceremony. AI has created immense opportunities, and versatile companies can be expected to take advantage and boost their position, while less flexible firms would perish, he said. “In every way, this is a rebirth of the computer industry and a golden opportunity for the companies of
‘ARCHAIC’: An interpretation of a law that considered Chinese as Taiwanese nationals was scrapped after the death of a Chinese in Kaohsiung led to state reparations An administrative mandate to consider Chinese as Taiwanese citizens was outdated, Premier Chen Chien-jen (陳建仁) said yesterday, a day after the Executive Yuan ordered that agencies disregard the 30-year-old interpretation. Chen made the remarks at an event held by the Environmental Protection Administration in Taipei following changes to the administrative mandate concerning the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (臺灣地區與大陸地區人民關係條例). The previous interpretation of the law was archaic and contrary to the workings of laws and regulations, he said, adding that the order was made to avoid unnecessary problems created by the mandate. The Mainland
NOT BUYING IT: One of the goals of Beijing’s Cross-Strait Media People Summit was to draw mainstream media executives to discuss the ‘one country, two systems’ formula Taiwanese news media insist on press freedom and professionalism, and would never become a tool of China’s “united front” campaign, Premier Chen Chien-jen (陳建仁) said yesterday, responding to media queries about the lack of Taiwanese media executives at the Cross-Strait Media People Summit in Beijing. Chinese People’s Political Consultative Conference (CPPCC) Chairman Wang Huning (王滬寧) was reportedly furious that no Taiwanese media representatives attended a scheduled meeting with him on Thursday last week. “Beijing should take Taiwan’s determination to pursue freedom and democracy seriously. We also hope that it will not use vicious means to interfere with Taiwan’s development into a
IMMIGRATION REFORM: The legislative amendments aim to protect the rights of families to reunify, and to attract skilled professionals to stay and work in Taiwan Foreigners who are highly skilled professionals, top-prize winners in professional disciplines, investment immigration applicants or have made special contributions to Taiwan can soon apply for permanent residency on behalf of their spouses and minor or disabled children after the legislature approved amendments to the Immigration Act (入出國及移民法). The amendments, which were proposed by the Ministry of the Interior and approved by the Executive Yuan on Jan. 12, aim to attract foreign talent to Taiwan and encourage them to stay. They would take effect once they are signed by President Tsai Ing-wen (蔡英文). The amendments involved changing 63 articles, making it the biggest