Nokia and Siemens Plan a Joint Venture

Elena
19 Jun, 2006
New York City

The 50-50 joint venture will be comprised of Nokia''s network business group and Siemens'' carrier-related operations, creating estimated synergies of 1.5 billion euros ($1.9 billion) by 2010. This move will help the two major companies to compete with market leader Ericsson AB. The joint venture will be called Nokia Siemens Networks.

[R]8:00AM Nokia and Siemens plan to combine their mobile-network operations.[/R]
Nokia Corp. and Siemens AG announced Monday plans to combine their mobile-network operations to create a joint venture with annual revenue of about $20 billion. This move will enable them to compete with market leader Ericsson AB which is the top maker and seller of the network equipment used by wireless providers to send phone calls, downloads and data to and from cell phones and other devices. The 50-50 joint venture will be comprised of Nokia's network business group and Siemens' carrier-related operations, creating estimated synergies of 1.5 billion euros ($1.9 billion) by 2010.

The joint venture will be called Nokia Siemens Networks and will have some 60,000 employees. Simon Beresford-Wylie, chief of Nokia's network operations, will head the new company, while its chief financial officer will be Peter Schoenhofer from Siemens. It was expected to be finalized by the end of the year, pending regulatory approval, and both companies said that between 10% and 15% of staff positions, or about 9,000 jobs, would likely be cut over the next four years. Shares of Siemens surged 8.2% in Frankfurt to 67.97 euros ($85.98), while Nokia was up nearly 3% to 16.11 euros ($20.38) in Helsinki.


[R]7:30 AM Asian stocks mostly decline on China’s central bank move.[/R]
Asian shares closed broadly lower. The Nikkei 225 Index fell 0.13% to 14860.35. On Friday, the index jumped 2.82%, ending a volatile week on a positive note. Traders sold electronics stocks, metals, banking and brokerage issues to make profit after their recent gains. Banks and exporters led the decliners in Japan. Mitsubishi UFJ Financial Group lost 2.01%. Sony shed 1.62%, while videogame rival Nintendo declined 1.22%. Sumitomo Metal Mining was off 1.35% and Daiwa Securities Group dropped 2.72%. China''s shares finished up for the third session in a row, powered by CAMC Engineering''s impressive stock debut. The benchmark Shanghai Composite Index advanced 0.8% to 1586.29 after losing nearly 9% last week on speculation of tightening measures. Hong Kong’s Hang Seng Index declined 0.47% to 15768.86 and in South Korean, shares settled down on profit-taking after Friday''s 3.5% rally, with concerns about a possible missile test by North Korea damaging sentiment. The Kospi Index dropped 0.8% to1251.67. banks and technology stocks led the decliners. Kookmin Bank shed 2.7% after advancing 3.7% on Friday. Its rival, Shinhan Financial Group, closed down 0.6%. Taiwan shares bucked the trend, led by food companies on hopes a rising Chinese yuan may support their earnings. The Taipei Index advanced 0.1% to 6583.04.


[R]6:30AM European bourses buoyed by Nokia and Siemens merger deal.[/R]
European stocks were higher in early trade on Monday. The FTSE 100 in London climbed 1.1% to 5,658.1, the Xetra Dax in Frankfurt was up 1.5% to 5,458.39 and the CAC-40 in Paris gained 4,751.03. In other news from the corporate front, Vinci was the worst faller on the Eurofirst 300, losing 2.7%, after Veolia Environnement, the French utility, abandoned its plan for a merger with the French construction and concessions group. Veolia, was up 4.1%, yielded to investors’ worried over a costly bid battle, saying conditions did not exist for a friendly deal.

Oil prices declined Monday, but steadied at the $69 level amid worries over Iran''s nuclear ambitions, and how that might impact oil supplies. Light, sweet crude for July delivery dropped 37 cents to $69.51 a barrel. Gold bullion opened Monday at a bid price of $570.60 a troy ounce, down from $573.50 late Friday. The euro slipped against the dollar on Monday on data posted late last week showing the U.S. trade deficit narrowed for the first three months of the year. The euro bought $1.2597, down from $1.2635 in New York on Friday. The British pound also slipped to $1.8445 from $1.8503 at the end of last week. The dollar also rose against the Japanese currency, purchasing 115.56 yen, up from 115.09.