Nokia Siemens Networks, the joint venture between one of Europe’s largest mobile technology companies, and one of the world’s largest producer of just about anything that runs on electricity, have confirmed that they’re looking for around $1 billion of capital from investment firms and that they’ve seen interest from Blackstone, TPG Capital and Bain Capital, along with several other unnamed firms. After spending $1.2 billion to buy Motorola’s network division, I’m not really surprised to hear that Nokia Siemens Networks is looking for money. Many investors have also been questioning why Nokia’s stock performance is tied to the infrastructure unit. They’ve been clamoring for a split for quite some time.
The infrastructure market is difficult to understand, at least for this writer. When operators around the world are facing an increased demand for mobile broadband, one would think they’d be looking at buying more equipment for their networks, right? And if that was the case then the infrastructure market should be booming, you following me on this one? So why is it that Ericsson, Huawei, and Nokia Siemens Networks consistently report pathetic profits, or even loses, quarter after quarter?
Without outside investments Nokia Siemens Networks can pour money into research and development to provide products that out do what their competitors have. Unfortunately it’s not technology that’s winning Huawei contracts, it’s their cheap cost of labor. I’ve heard stories from friends at Nokia Siemens Networks that when their engineers get sent to the field they get put up at fairly nice hotels and work 6 or 7 hour days, whereas the Chinese sent their people to build networks with a sleeping bag, tent, and amphetamines so they can work around the clock. Now that’s obviously a tall tale, but the European work ethic versus the Asian pursuit of world domination and economic expansion clearly shows.
[Via: Phone Scoop]