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Nokia Siemens Networks (NSN), a 50-50 joint venture between Nokia Corp. ( NOK - Analyst Report ) and Siemens AG ( SI - Analyst Report ) to provide telecom network infrastructure solutions, has created a spinoff investment fund called “Verso Ventures.”
As a part of its massive restructuring activities, NSN is trying to offload its non-core business units. Some of its non-core assets find immediate purchasers. However, there still exist some non-core units that the company is still not abele to sell.
NSN is trying to provide an opportunity to this non-sold business lines to that these units can do business independently with some startup funds. Together Nokia and Siemens invested approximately $12.3 million in this fund. Furthermore, NSN will also license its technologies to these spinoff units.
In November 2011, NSN initiated a massive restructuring process. As a part of that process, the company has decided to concentrate primarily on wireless broadband networks, customer experience management, and professional services. NSN is divesting its non-core businesses, which will reduce its headcount by 17,000 throughout the world.
The complete exercise is designed to reconstruct the business structure of the joint venture so that it can opt for an IPO. Both Nokia and Siemens are now eager to come out of this venture and concentrate more on their core businesses. However, several industry researchers believe an NSN IPO can take place only after properly revamping the struggling telecom infrastructure solutions provider, which will take quite some time.
Despite being the second largest company in this field after LM Ericsson AB ( ERIC - Analyst Report ) , NSN always remain in sticky wicket once it was formed in 2007. The company is still not able to reach profitability.
Management expects its proposed restructuring to result in an annual cost reduction of approximately $1.35 billion by 2013. Importantly, the joint venture between Nokia and Siemens will come to an end in 2013.
Recently, massive competitive threats from low-cost Chinese network infrastructure vendors become a matter of concern for NSN. Huawei and ZTE are fighting neck and neck with NSN to capture the global market share. As a result, the company became marginalized in the battle field due to the introduction of more efficient and price effective equipments from Ericsson, Huawei, and ZTE.
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