Nokia Siemens Networks, which is trimming headcount as it tries to turn its financials around, will unload its optical networking unit to a private equity concern, the company said Monday.
Marlin Equity Partners will buy Nokia Siemens Networks' optical unit for an undisclosed amount. According to Marlin Equity Partners, the unit will be established as an independent company, based in Munich, Germany, to compete in the optical networking market. Meanwhile, Nokia Siemens Networks will put its energies into mobile broadband, which the company has said would be its strategic focus going forward.
"During 2012 Nokia Siemens Networks has made tremendous progress in the transformation of our company to being the world's mobile broadband specialist. Our strategic focus on our core markets has enabled us to concentrate our energy and investment in areas such as LTE where we have strengthened our global leadership position," Rajeev Suri, Nokia Siemens Networks' CEO, said in a statement.
The transition will affect 1,900 employees, based primarily in Germany, Portugal and China, who will transfer to the new company, according to Nokia Siemens Networks.
Nokia Siemens Networks was formed as a joint venture of Nokia and Siemens in 2007, but it has been unprofitable for all but two quarters since then. A year ago, it confirmed plans to cut 17,000 jobs and divest certain businesses as it shifts its focus entirely to the mobile broadband market. Adtran acquired Nokia Siemens Networks' fixed line broadband business in 2011.
Telecom researcher Ovum hat-tipped the move, saying the optical unit didn't appear to have much hope in its present form.
"When Nokia Siemens Networks announced its updated strategy about a year ago, it said it was focusing its business on mobile broadband but needed to keep its optical group as a complement," Dana Cooperson, leader of Ovum's Network Infrastructure Telecoms practice, said in a Monday note. "This struck Ovum as odd: its strongest position in optical (it's ranked 10th globally in the $14.9B market with just under $500M annual sales) is in the network core, where there is little connection with mobile broadband."
Continued Cooperson: "NSN's optical business has been slipping for years with no clear plan to improve; it has not done the kind of fundamental R&D that its main competitors (e.g. Alcatel-Lucent, Ciena, Cisco, Huawei) are doing."
Cooperson further speculated that Marlin Equity's goal may be to sell the optical business to another telecom infrastructure-focused vendor, such as Juniper.
PUBLISHED DEC. 3, 2012