In a rather alarming announcement in some quarters, the Reuters news service announced today that Nokia Siemens Networks has engaged in discussions with unions in Germany and Finland regarding cutting more than 4,000 jobs in austerity measures.
Nokia Siemens is the world’s second-largest maker of mobile phone network equipment and is looking to slice around one billion euros (approximately US$1.31 billion) from its annual operating budget by reducing the German work force by 2,900 jobs and its Finland workforce by 1,200 jobs.
Nokia and Siemens joined forces in 2007 to better compete against larger companies like Sony Ericsson and newer Chinese firms.
Although Nokia set internal records for handsets sold last year, the company still posted a year-on loss. The jobs reduction in Nokia Siemens is a result of tightening the budget to increase profitability.
Nokia Siemens isn’t the only telecom company to reduce expenses to increase profits. Sprint USA has stopped primary service in numerous cities to reduce maintenance costs and network expansion costs when other networks provide the hardware on which Sprint can piggyback service.
Research in Motion has recently undergone management changes in hopes of returning the Canadian firm to firmer financial ground.
AT&T and other telecom firms have attempted mergers with smaller, less financial secure providers but have faced regulatory set-backs, which in turn, have further decimated financial reserves of the companies seeking partnerships and financing to keep afloat.
Some manufacturers and network providers look at improving their financial outlook by increasing prices of mobile phones to retailers and resellers. Apple, for example, charges its retailers huge licence fees for every mobile phone sold into the provider’s network, in addition to patent license fees to manufacturers to build their own mobile phones to begin with.
Whilst Nokia Siemens is in the financial news today, others will no doubt follow soon in mergers, stock price moves, lawsuit results and technology advancements are announced.