Happy Holidays! You’re fired.
That’s what many Nokia Siemens employees will hear while they prepare for winter vacation, as the Finnish-German mobile company announced plans to lay off 17,000 workers over the next two years, nearly one quarter of its workforce.
As the joint-venture of Nokia and Siemens, the mobile infrastructure-focused business has remained largely unprofitable since its inception in 2006, and has struggled to compete with mobile marketshare leader Ericsson AB. Nokia Siemens also faces stiff competition from Chinese competitors Huawei and ZTE, both of which create lower-cost products.
“As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation,” Nokia Siemens CEO Rajeev Suri said in a statement.
In a major acquisition which closed in April of this year, Nokia Siemens purchased the wireless infrastructure assets of the U.S.-based Motorola Solutions for $975 million. Nearly 7,000 new employees came with the deal, most likely prompting this latest round of layoffs.
The workforce reduction will trim approximately $1.35 billion in yearly operating expenses, according to Suri.
Nokia shareholders reveled at the news, as the stock jumped 2.3 percent in after-hours Helsinki trading. Siemens shares rose slightly by 0.6 percent on the Frankfurt exchange.
What’s good for the company, however, will most likely bring little comfort to the soon-to-be-former members of the workforce.
Happy Holidays, indeed. Let’s go out on a limb here and predict that there will be other shoes like this dropping as the books on Q4 and 2011 close.