NSN CEO Says No More Cash From Nokia, Siemens
Struggling Nokia Siemens Networks (NSN), the world's second-largest maker of mobile phone network equipment, cannot expect any more cash injections from its two parent companies, chief executive of the venture said in a letter to employees.
Parents Nokia and Siemens have provided capital "for the last time" and expect this investment will provide results, according to a copy of a letter sent from CEO Rajeev Suri to NSN's 74,000 employees, which was obtained by Reuters.
"Our profitability remains far too low, with huge net losses since the start of the company. We continue to burn cash and have consistently generated negative free cash flow," Suri said in the letter seen by Reuters.
"We have too many businesses that have never produced adequate returns and regions that continually deliver losses."
A spokesman from NSN declined to comment.
NSN has struggled to make a profit since being set up in 2007 and earlier this week, Nov. 23, announced plans to axe 17,000 jobs, nearly a quarter of its workforce.
NSN was formed by Finnish cellphone maker Nokia and German congolmerate Siemens in the hope of building enough scale to lead an industry dominated by Swedish company Ericsson and, increasingly, by Chinese entrants.
It has faced aggressive pricing from rivals and an economic downturn that has forced telecoms companies to cut spending.
After the announcement several analysts said they thought the venture would need to raise more money from its parents to cover the restructuring costs on top of the 1 billion euros its raised only in late September.
NSN said earlier this week it would revamp its offering, focusing on mobile broadband and services, while exiting some of the undefined businesses.
In the letter to employees Suri said the company would seek to exit or to put on maintenance mode businesses such as fixed-line VoIP, broadband access, WiMAX, narrowband, carrier Ethernet, business support systems, and communications and entertainment solutions.
Suri said Japan, Korea and the United States will be the three priority countries for NSN where it "absolutely must succeed."
German magazine Spiegel reported on the letter earlier on Sunday.