Nokia Siemens reports losses in the fourth quarter

Nokia Siemens Networks reported progress on cutting costs, but charges related to the combination of Nokia’s and Siemens’ networking businesses continued to drag on the company’s bottom line; Nokia Siemens Networks posted $179 million in losses in the final quarter of 2008.
Parent company Nokia Corp. announced its fourth quarter results this morning and reported NSN has achieved its targeted cost savings of $2.5 billion that was set for 2008.
However, NSN took a hit on $152 million of intangible asset amortization and other purchase price accounting related from the formation of the company. NSN was formed in 2007 when the Finnish company combined its network infrastructure unit with Siemens of Germany. NSN broke even in the fourth quarter of 2007.
For the final quarter in 2008, the joint venture posted sales of $5.5 billion, a 5% decrease when compared with the fourth quarter in 2007. The company was hurt by lower demand in Europe, China and North America. Business declined in Europe by 20%, more than 18% in North America and 17% in China.
However, the company’s performance was an improvement from its third quarter, when Nokia Siemens posted sales of $4.5 billion.
The company’s gross profits for the quarter, $1.4 billion, decreased 17% when compared with a year ago, when the company had a gross profit of $1.8 billion.
Overall in 2008, nets sales for NSN increased to $19.8 billion, a 14% increase from 2007. The company’s overall operating loss for 2008 was $389 million, which is an improvement from 2007 when the company reported losses of $1.6 billion.
“The decrease in operating loss in 2008 resulted primarily from higher net sales and lower operating expenses and restructuring costs,” the company said.
The company has been able to cut operational costs partly to cutting its workforce. Last year, NSN announced it would cut 9,000 jobs.
For 2009, company officials are expecting the mobile infrastructure and related service market to decline by 5%. The company expects to continue to hold its place in the market this year.
According to ABI Research, NSN only trails L.M. Ericsson in the infrastructure market. Ericsson continued to dominate with a strong fourth quarter.
NSN officials said the company made numerous strides in 2008 in a number of areas. It was the first vendor to ship LTE-compatible base stations and it secured 3G contracts with three major operators in Canada: Telus, Bell Canada and Videotron.
The company also signed a service deal with Tata Teleservices Ltd. in India for its new GSM network. The company also won a major service deal with Embarq Corp. in the United States. NSN is also participating in the LTE trials set up by Vodafone and Verizon Wireless.