Companies choose the time they announce sackings. Routine efficiency dictates a scrutiny of the hiring programme before announcing 17,000 firings.
Like Alcatel-Lucent, the four year-old NSN hasn’t come to terms with the competition from Huawei and ZTE which have bagged up a 30%+ market share in EMEA.
Alcatel-Lucent has seen its market cap drop to $5.3 billion from $111 billion in 2000. Alcatel-Lucent’s 18,800 patents are estimated to be worth $9 billion -so the value of the rest of the company is seen as substantially less than zero. Questions are being asked about the future of the management.
NSN is not publicly quoted – but it wants to be. Its parents plan to IPO this unpromising child in 2013, but a Q3 2011 operating loss of €114 million followed by a parental injection of another €1 billion into the company last September, is not positive.
Ominously for NSN employees, in September Nokia and Siemens appointed a chairman for NSN who was previously the CFO of a network. CFOs typically cut, not build.
Even the private equity company KKR, with a reputation for over-paying for European tech assets, couldn’t be persuaded to buy NSN when it was offered to them.
The NSN strategy is not to grow its way out of its problems but to shrink its way out.
NSN is expected to exit its Wimax and carrier Ethernet businesses, drop its fixed-line VoIP and broadband access businesses, and get out of its business support and entertainment products.
CEO Rajeev Suri says that NSN will focus on wireless broadband. In July 2010 it paid $1.2 billion for Motorola’s wireless network equipment unit. “Our goal is to provide the world’s most efficient mobile networks,” says Suri.
But not, it seems, the most cost-efficient.