Nokia Siemens Networks ('NSN') - a 50-50 joint venture between
Nokia Corporation
(
NOK
) and
Siemens AG
(
SI
) - has won two different network orders in quick succession from
telecom giant
China Mobile Ltd
(
CHL
) and
Telefonica S.A.
(
TEF
). This successive order wining reflects the company's ability to
serve diverse network needs of different customers.
Under the agreement, NSN will deploy China Mobile's Serve
atOnce Intelligence customer and business network analysis tool
in the Guangdong region of China. The new analysis tool will
provide information regarding customer usage and preference. It
is also expected to allow the largest telecom carrier in the
world to increase customer loyalty and add new revenue
streams.
In another agreement, NSN will upgrade the existing GSM and 3G
network of O2 (Telefonica UK) with radio access network
technology to provide LTE (Long Term Evolution) services across
London and south east of England. The contract includes
installation of NSN's NetAct network management system that will
allow consolidated configuration, monitoring and network
optimization across the network.
The leading telecom equipment manufacturer NSN has been going
through a tough time for quite some time. Though the company has
a strong GSM portfolio, it lacked severely on the CDMA front,
which is the most dominant network used in the lucrative North
American market.
In order to overcome this and reduce operating costs, the
company is retrenching employees and selling its non-core
business units. NSN plans to lay off 17,000 or 23% of its work
force and expects the restructuring to result in an annual cost
reduction of approximately $1.35 billion by 2013. The company has
trimmed about 13,000 of its work force and has made five
divestments, so far this year.
In the last two months, the company has won two network
contracts from China Mobile and South Africa's Vodacom. Addition
of these latest contracts will only consolidate its falling
network business which has been subject to huge cash losses for
quite some time.
Additionally, winning business in the mainland and pitting
Chinese rival in their own backyard could be viewed as a positive
for NSN, which has been facing tough competition from ZTE and
Huawei technologies.
We retain our long-term Neutral recommendation on Nokia Corp.
Also, it holds a Zacks #3 Rank, implying a short-term Hold
rating.
CHINA MOBLE-ADR (CHL): Free Stock Analysis
Report
NOKIA CP-ADR A (NOK): Free Stock Analysis
Report
SIEMENS AG-ADR (SI): Free Stock Analysis
Report
TELEFONICA S.A. (TEF): Free Stock Analysis
Report
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