Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Nokia Corp. (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (4436)	12/1/2006 3:55:44 PM
From: Eric L	Read Replies (1) \| Respond to of 9255

Ovum on Nokia Siemens Networks >> Nokia Siemens Networks provides details during Nokia Capital Markets Day 2006 Dan Bieler Ovum's EuroView Daily Comment December 1, 2006 ovum.com Nokia held its Nokia Capital Markets Day 2006 in the Netherlands this week. As part of this event the company provided some more details about the newly created division Nokia Siemens Networks. Nokia Siemens Networks has cleared most regulatory hurdles and expects to commence operations in January 2007. Comment: We are encouraged by what we have heard from Nokia Siemens Networks' CEO Simon Beresford-Wylie and other senior management. We wanted to get answers to four questions. First, who's boss? We do not like mergers without one party taking the lead. Second, are the company cultures compatible? The question is not whether the Finnish get on with the Germans, but how well one global company with a more centralised approach (Nokia) can integrate with a global company with a more de-centralised approach (Siemens). Third, what synergies and opportunities arise from the merger and how much progress has been made to exploit the potential? Fourth, how does Nokia Siemens Networks stack up against existing and emerging competition? During the various presentations and face-to-face discussions, we gained a distinct impression that Nokia is willing to take the lead. Although not news, this is reassuring and we believe this will also help to create a new company culture. We see the emergence of a new culture for Nokia Siemens Networks as being crucial for the successful integration. Only if staff of both divisions develop a common purpose, will Nokia Siemens Networks succeed in synchronising their respective portfolios and distribution channels. Ignorance of these soft issues has undermined many a promising merger. Thankfully, we are encouraged by the signs of cooperation between Nokia and Siemens staff. Positive signs of cooperation show in progress reported regarding integration planning. Nokia Siemens Networks has identified €1.5 billion estimated annual cost synergies by 2010. One third of these synergies come from cost of goods sold (e.g. procurement and streamlined processes), 40% from R&D savings, 20% from sales and marketing savings and 7% from general administrative activities. An important part of the cost savings come from the planed 10-15% headcount reduction of the 60,000 workforce. Given the recent outrage over the BenQ redundancies in Germany, this issue could throw up some negative headlines in Germany in the medium term. The opportunities, meanwhile, are evident. The combined customer base stands at around 600 in 150 countries. Significantly, Nokia Siemens Networks has 200 managed service customers. Although the overlap in the customer base is only around 10%, it is possible that Nokia Siemens Networks could see some defections. On the other hand the argument that Nokia Siemens Networks emerges as a serious alternative to the new Alcatel-Lucent for several potential customers should not be underestimated. Nokia Siemens Networks seems well positioned to tackle its competitors, boosting a truly global footprint and a balanced and strong product portfolio. But perhaps the biggest challenge for Nokia Siemens Networks lies in the need to shift away from the traditional box-shifting thinking towards the realisation that in order to succeed over the long-term, they need to think more and more like a software business. ### - Eric -