* Nokia Siemens Networks (NSN) plans further cost cuts
* Ow ners tried to sell minority stake to
* V enture's equity valued at 7-8
bln euros -analyst
* Siemens says looking to exit venture sooner or later
* Nokia shares drop to lowest level since Jan 1998
(Adds details on value, exit, updates shares)
By Tarmo Virki and Terhi Kinnunen
HELSINKI, July 13 Struggling Nokia
suffered a fresh blow on Wednesday when it abandoned
plans to sell a stake in its network gear venture with Siemens
Nokia's shares, which have halved in price since February as
the handset maker fights to restore its fortunes and reverse
market share losses to nimbler rivals, fell below 4 euros and to
their lowest levels since January, 1998.
Nokia Siemens Networks (NSN), the world's No. 2 maker of
wireless networking gear, has struggled to make a profit since
its formation in 2007, hit by falling operator spending and
price cuts by market leader Ericsson (ERICb.ST) and Chinese
rivals Huawei and ZTE .
Both parents have written down the value of their
holdings in NSN, the equity of which Bernstein Research has
valued at 7-8 billion euros ($10 billion to $11.4 billion)
Analysts said a private equity
offer for NSN -- which Nokia and Siemens
turned down -- likely valued the venture well below that.
During 12 months of talks with private equity on a sale,
NSN's operations have improved, helped by a boom in new network
"This seems like a sensible decision from parents given that
Nokia Siemens Networks is starting to turn around its fortunes,"
said analyst Paolo Pescatore from research firm CCS Insight.
The venture is expected to report an underlying operating
profit of 75 million euros ($107.3 million) -- larger than
Nokia's phone unit -- on sales of 3.4 billion for the April-June
quarter when it reports on July 21.
NSN said it plans to further improve the
competitiveness of the company as a standalone entity. It
has cut thousands of jobs since it started operations in 2007.
In a statement both parents reaffirmed their commitment to
the venture but a spokesman for Siemens said the German company
was still looking to exit the venture sooner or later.
Siemens has been looking for an exit since Peter
Loescher took over as group chief executive shortly after the
venture started operations, sources have told Reuters.
While telecom gear has been much closer to Nokia's core
business over the years, its focus has shifted increasingly to
its struggling cellphone business.
"Nokia has on several occasions said that it (NSN) is not
its core business and probably they will continue to find some
kind of solution to this," Pohjola Bank analyst Hannu Rauhala
Shares in Nokia were 3.4 percent lower at 4.04 euros by
1437 GMT, after hitting 3.99 euros earlier, while Siemens shares
were 1.9 percent higher at 94.78 euros.
"The timing for selling the unit could hardly have been
worse; there are clear signs from companies like LG and ASML of
European handset market descending into a slump and selling a
mobile network company on the eve of a handset market downturn
is a tough challenge," said MKM Partners' analyst Tero
Nokia 's share price slump follows fears that
the company's shift to Microsoft Windows software
for its handsets may not stem the loss of smartphone market
share to rivals such as Apple Inc's iPhone.
At the end of May Nokia warned that its second-quarter
results would be well below a previous outlook and ditched its
(Additional reporting by Jens Hack in Munich; Editing by
David Holmes and David Cowell)