Nokia Siemens Networks, a 50-50 joint venture between
Nokia Corporation ( NOK )
and Siemens AG ( SI ) is
in its final lap of negotiations to sell its Business Support
System (BSS) unit as the network giant plans to concentrate on
mobile broadband business.
Sweden's Ericsson ( ERIC ),
U.S.-based Amdocs Ltd. ( DOX )
and some private equity firms are interested in the BSS unit, which
help telecom carriers to manage their charging and billing system.
It is expected that Nokia-Siemens can earn upto $377 million by
selling the business.
Global economic crisis has led to reduced carrier spending on
expanding mobile infrastructure, thus affecting the business of
telecom equipment providers. Intense competition has further
aggravated the problem, forcing industry player like Nokia-Siemens
to slash as much as 17,000 jobs by the end of next year. Likewise,
rival Alcatel-Lucent SA ( ALU )
has also announced to slash 5000 jobs.
Selling of the BSS unit is the third of its kind in the last
four months after it sold its microwave transport business to
DragonWave Inc. ( DRWI )
in June and the fixed line broadband access business to
Adtran Inc. ( ADTN )
in May. We believe this is part of the company's strategic decision
to offload its non-core division to reduce its mounting loss and
focus more on building high speed mobile network.
The current Zacks Consensus Estimate for Nokia Corporation is
pegged at a loss of 12 cents for the third quarter of 2012 with a
growth rate estimate of (393.06%). For 2012, the Zacks Consensus
Estimate stands at a loss of 38 cents with a growth rate of
(199.54%) while for 2013, the Zacks Consensus Estimate stands at a
loss of 1 cent with a growth rate of 96.67%.
We retain our long-term Neutral recommendation on Nokia Corp.
Currently, it has a Zacks #3 Rank, implying a short-term Hold
ADTRAN INC (ADTN): Free Stock Analysis Report
ALCATEL ADS (ALU): Free Stock Analysis Report
AMDOCS LTD (DOX): Free Stock Analysis Report
DRAGONWAVE INC (DRWI): Free Stock Analysis
ERICSSON LM ADR (ERIC): Free Stock Analysis
NOKIA CP-ADR A (NOK): Free Stock Analysis
SIEMENS AG-ADR (SI): Free Stock Analysis Report
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