Nokia Siemens Network struggles out the gate

Joint venture between Nokia and Siemens gets off the ground--but it's already warning profits won't grow much in 2007.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
Nokia Siemens Network, the joint venture formed between Nokia and Siemens, got off the ground Sunday, but the company is already warning it won't meet financial expectations.

On Monday, the company that will sell infrastructure gear to build wireless and fixed-line communications networks, said it expects "very slight" growth in 2007.

The network equipment maker had earlier forecast "slight" growth. But now company executives said there are signs of a slowdown in spending by communications service providers that will impact its yearly revenue outlook.

"The companies now expect very slight market growth for the mobile and fixed infrastructure and related services market in euro terms in 2007," the company said in a statement.

Nokia and Siemens announced plans to form the joint venture last June. At that time, the company estimated cost savings of about $2 billion by 2010. Executives reiterated this target.

Much of the cost savings will come from restructuring, which will include a 10 percent to 15 percent reduction in work force. Initially, about 60,000 workers are expected to lose their jobs.

The new Nokia Siemens Network is one of the largest makers of communications gear in the world, competing with companies such as Alcatel-Lucent, Nortel Networks and Ericsson.

The joint venture was expected to begin operations at the start of the year. But it was delayed due to a corruption investigation that involved several Siemens executives allegedly accepting bribes.