Finnish-German telecoms giant Nokia Siemens has surprised the business world by announcing 17,000 job cuts, representing a very-significant 23 percent of its workforce.
The struggling networks provider said the cull among its worldwide staff of 74,000 would reduce costs by EUR 1 billion and increase share prices.
Siemens, from Germany, and Nokia, from Finland, considered listing the loss making venture as a new company as it faces strong competition from industry rivals. In a statement, Rajeev Suri, the company’s chief executive, said the layoffs are “regrettable but necessary”.
“As we look towards the prospect of an independent future, we need to take action now to improve our profitability and cash generation,” Mr Suri said.
Speaking to the BBC, Swedbank analyst Jari Honko said, “This is a big move. I believe the goal is an Initial Public Offering [flotation]. That cannot be done with the current structure and operation models.”
“These changes didn’t come out of the blue,” added Sami Sarkamies from Nordea Bank. “When a new chairman was appointed earlier, they signalled that a strategy update would be coming,” He speculated that the cuts would most likely come in a series of waves.