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 Looking to compete with the world's largest network equipment maker market leader—LM Ericsson—Nokia and Siemens announced Monday, June 19 they would merge their mobile and fixed-line networking equipment businesses in a deal valued at $31.5 billion. The proposed union would create the No. 3 network gear dealer behind Ericsson and No. 2 Lucent-Alcatel, which announced its merger only three months ago.
WHAT THEY DO The network equipment sector creates the fiber optic cables, routers and wireless beaconsused by the communications networks of large phone carriers such as Verizon and Cingular. BATTLING FOR A SHRINKING PIE So, why merge?
So with all signs pointing to a smaller network equipment maker sector, what will the new combination of Nokia and Siemens look like? ANTICIPATION ... The combination, which is labeled a 50-50 joint venture by both companies and will be known as Nokia Siemens Network, would have combined revenue of $20.5 billion. Nokia says the new company would have 60,000 employees when it begins operation, shedding an estimated 10% to 16% of its workforce. The job reduction would save the new company and estimated $1.9 billion by 2010. The companies said they expect the merger, which regulators must approve, to close by Jan. 1.
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