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Damaged by lower sales, huge operating losses, and a falling market share, Nokia Siemens Networks is pinning its hopes on a major reorganization.
The network equipment maker, jointly owned by Nokia and Siemens, announced Tuesday that it will lay off 5,700 employees and cut its five business units to three as part of a plan to slash expenses by 500 million euros ($740 million) by the end of 2011.
The layoffs will represent around 7 percent to 9 percent of the company's 64,000 global employees and is likely to be felt across all countries in which Nokia Siemens has a presence. The company did not state which jobs would be affected but did say that any disruption to sales positions that deal directly with customers should be limited.
The three new revamped business units are expected to launch on January 1 and will include Business Solutions, Network Systems, and Global Services.
"As our customers make purchasing decisions, they want a partner who engages in issues well beyond a traditional discussion of technology," said Rajeev Suri, chief executive officer of Nokia Siemens Networks, in a statement. "Business models, innovation, growth and transformation are now very much front and center when it comes to the selection of a technology partner - and our planned new structure will position us well in this changing market."
The company said it's also looking at potential new acquisitions and partnerships that could enhance its product line or expand its customer base. In June, Nokia Siemens bought Nortel's wireless technology for $650 million.
"We recognize that we are operating in a market where customer needs are evolving fast," said Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, in a statement. "We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible."
Formed in early 2007, Nokia Siemens has seemed cursed from the start. Its launch was initially delayed a few months due to a bribery scandal involving several former Siemens executives.
The new company had hardly gotten off the ground when it announced it wouldn't meet financial expectations. And it's struggled since then, hurt by the economic downturn and increasing competition.
Third-quarter sales fell 21 percent to 2.8 billion euros, while its operating loss widened to 1.1 billion euros. Parent Nokia was recently forced to spend 908 million euros to write down the value of the deteriorating business.
Advanced Micro Devices has launched a reorganization that will see the chipmaker's microprocessor and graphics units merged into a single group.
The products group--one of four new groups announced Wednesday--will be headed by graphics chip executive Rick Bergman, who joined AMD after its $5.4 billion acquisition of graphics chip company ATI in 2006. The chipmaker said the other three groups would focus on technology, marketing, and customers.
"The next generation of innovation in the computing industry will be grounded in the fusion of microprocessor and graphics technologies," AMD CEO Dirk Meyer said in a statement. "With these changes, we are putting the right organization in place to help enable the future of computing."
The company also announced that Randy Allen, who oversaw processor and chipset development as senior vice president of AMD's Computing Solutions Group, is leaving the company. His departure comes one year after being elevated to that position in another companywide reorganization.
There was no indication of what Allen's plans are, but Meyer called Allen "an important engineering and business leader who has played a key role in many of AMD's most significant achievements in recent years."
The changes come as AMD tries to compete better with chip giant Intel in the aftermath of the botched roll-out of Barcelona, its first quad-core server processor. Hector Ruiz, then CEO of AMD, in 2007 blamed the chip's "complicated" design for the delay of more than six months before the chip was ready for release, causing AMD to lose market share and revenue to Intel.
In November, the troubled chipmaker announced its second round of layoffs in 12 months, part of plan announced in April 2008 to reduce its workforce by 10 percent.
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Howard Stringer at CES 2009.
(Credit: Corinne Schulze/CNET)Update at 9:10 a.m. PST: Comments added from an Ovum analyst.
The top three executives at Sony soon will all be named Howard Stringer.
The Japanese electronics giant on Friday announced a management shake-up in which Stringer, who already is serving as chairman and CEO, will also take on the role of company president. In doing so, Stringer replaces Ryoji Chubachi, who will become vice chairman.
At a press conference in Japan, Stringer played up the efficiencies of his becoming president. "Why do we need another executive in between me and this group?" he said, according to an Associated Press report. "We do not need a bureaucratic layer."
The management changes will take effect April 1--as will a reorganization of the company's electronics and game businesses as Sony continues to take its financial licks amid harsh economic conditions.
At the Consumer Electronics Show in January, Stringer had emphasized that an essential element of surviving the recession lies in the convergence of networked entertainment and technology.
In an apparent effort to speed up such convergence, the reorganization creates two new business groups:
•Networked Products and Services Group, led by Kazuo Hirai: This unit will include Sony Computer Entertainment; personal computers, including the Vaio line; new mobile products, including the Walkman lines; and Sony Media Software and Services. This group, Sony said, also is expected "to incubate new products leveraging Sony's best technologies. Integral to this process is the utilization and expansion of the PlayStation Network service platform."
•New Consumer Products Group, led by Hiroshi Yoshioka: This unit will include the current television, digital imaging, and home audio and video businesses. Sony's semiconductor and components group also will report to Yoshioka.
There will also be two cross-company units: the Common Software and Technology team and the Manufacturing/Logistics/Procurement group.
"Any integration within that company is a good move," Michael Philpott, a principal analyst at Ovum, told ZDNet UK on Friday. "Hardly any of the devices that (Sony has), even if they're supposed to work together, work together very well at all."
Philpott noted a recent lack of central strategy at Sony and said a longstanding drive to unite the various units within the company had not yet produced results.
Asked whether it made sense to integrate the Vaio business into the same division that deals with the PlayStation and Walkman brands, Philpott said it depended on how Sony intends to use that integration.
"If you look at Apple, Apple has made the (MacBook) the central point of their connected home strategy--everything else links to it, such as the iPod and Apple TV," he said. "If Sony's thinking about developing new products and services using the PC as a media center to enable new experiences for the consumer, then that will start to make sense. If they're not thinking about doing that, there doesn't seem to be any point."
Jon Skillings of CNET News reports from the Boston area. David Meyer of ZDNet UK reports from London.
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