Monday, June 19, 2006

Nokia, Siemens to merge phone equipment units reports that Nokia (NOK) and Siemens (SI) "have agreed to combine the bulk of their telecom equipment businesses to create one of the biggest players in the industry. The units in the 50-50 venture, "Nokia Siemens Networks," had sales of 15.8 billion euros ($20 billion) last year, which would make it the second biggest mobile equipment player and third in fixed infrastructure."

According to the article, "no money will change hands between the German and Finnish parents in the deal, which will put the new group in the same league as current industry leader Cisco Systems Inc. and the merged Alcatel-Lucent by sales."

Ed Snyder at Charter Equity Research said, "The merger gives Nokia and Siemens scale they couldn't get otherwise. You're going to be able to get rid of a lot of people, basically. They share common markets."

Nomura analyst Richard Windsor said, "I like the idea but I think it's risky. On the wireless side Nokia is sub-scale and putting them together will help. But in wireline Nokia has no business whatsoever and it's now being tasked with turning around a business that Siemens failed to do over the last six years."

Nokia Siemens Networks "will have its headquarters in Nokia's home country of Finland and be headed by Simon Beresford-Wylie, who currently heads Nokia's networks division. It will also have regional headquarters in Siemens' home city of Munich and Peter Schoenhofer will be chief financial officer."