Nokia Siemens falls further behind Ericsson

Finnish-German telecoms giant Nokia Siemens Networks has fallen further behind mobile phone rival Ericsson of Sweden, according to an analysis of both companies’ third quarter figures.

Nokia’s network division disappointed by failing to meet stock market forecasts while, after deduction of non-recurring items, Ericsson exceeded stock market expectations. Ericsson’s share price grew in excess of four percent on the Swedish Stock Exchange following Friday’s interim report announcement.

A shortage of components, particularly in high margin products, was seen as one of the key factors in Nokia Siemens Networks’ relatively weak profit yield. Further, the company’s net year-on-year sales in the key emerging market of China took a seven percent hit. In contrast, Ericsson’s net sales in the Chinese and Southeast Asian markets increased by 24 percent over the same period.

Ericsson’s success has been attributed to reducing business costs, chiefly through job cutting initiatives. In addition, the summer 2009 purchase of Canada’s Nortel Multi Switch Service has given further initiative to the Swedish telecoms firm.

Comparison of the world’s two leading mobile network solution providers reveals that for some years the advantage has rested with Ericsson. As a consequence, Ericsson has been utilising this favourable imbalance in its business activities, in much the same way as Nokia is able to do in mobile handset sales.

The EUR 116 million operating loss endured by Nokia Siemens Networks over the July-September period has led to the announcement of job cuts aimed at cutting costs. In early September, the company revealed some management of orders operations will be outsourced to the consulting agency Capgemini, reducing worldwide job numbers by 390.

Following the launch of Nokia Siemens Networks in April of 2007, the venture employed around 9,000 Finnish workers. The company currently employs 7,400 workers in Finland.