Nokia Siemens Networks, one of the world’s largest providers of the infrastructure equipment that enables our mobile phones to actually connect to the internet and do useful things, has just secured a 1.2 billion Euro loan according to Retuers. The goal was to raise 1.5 billion Euro, but “due to market turmoil”, which is a fancy way of saying the global economy is being flushed down the toilet, they had to settle with 300 million Euro less. What’s the money going to be used for? Mainly to pay off the 17,000 people they plan on firing, which is nearly 1 out of every 4 employees. Why is the company doing so bad? Competition from Chinese vendors such as Huawei, who are outbidding them on deals thanks to their lower cost structure and products that are essentially “good enough”. There’s also Ericsson, who is the leader in the infrastructure space, they’re now offering a whole host of services, including mobile payments, that basically lets operators just sit on their ass and collect a paycheck while all the heavy lifting is done by someone else.
The bigger news from this story is that Nokia Siemens Networks had to raise the money themselves instead of getting it from their parents. Nokia is Mommy, Siemens is Daddy, and they’ve had enough of the bad results that their child brought home from University every semester. That doesn’t exactly bode well for the future of the company. Sure, they’ve got a lot of patents, and yes, they have a lot of nice equipment and a talented group of engineers, but who’s to say that that’s enough these days to survive?
Expect to hear more about Nokia Siemens Networks’s performance tomorrow when Nokia posts their Q4 2011 and full year 2011 financial results. We’ll be on the call, especially to find out how many Windows Phones Nokia sold, but that’s a whole other story!