Nokia Siemens venture trims networks market outlook

(Adds details, analyst comments, shares)

HELSINKI, April 2 (Reuters) - Nokia Siemens Networks NOK1V.HESIEGn.DE trimmed its outlook for the mobile and fixed telecoms infrastructure market on Monday, forecasting only very slight growth in euro terms this year.

The network equipment maker, which only began operating as a joint venture on Sunday, said there had been signs of a slowdown in spending in some regions in the last couple of months.

“The companies now expect very slight market growth for the mobile and fixed infrastructure and related services market in euro terms in 2007,” the networks firm said in a statement.

Nokia, the world’s biggest maker of mobile phones, had previously forecast slight growth in the mobile and fixed infrastructure and related services market in euro terms in 2007.

The networks venture repeated its target for cost synergies of 1.5 billion euros ($2 billion) annually by 2010. Some of those savings are expected to come from a planned 10-15 percent cut in the initial staff of 60,000 during the first four years of business.

Nokia shares opened lower after the comments on the outlook, losing 1.7 percent to 16.94 euros by 0712 GMT, compared to a DJ Stoxx technology index down 1.0 percent. Siemens stock was down 0.9 percent.

“It is a small downgrade, but something that is not likely to go across very positively,” said Jari Honko, analyst at eQ Bank, who has a “reduce” recommendation on Nokia. “This sets a direction at least and some reason for caution for investors for what the whole year will turn out like.”


The new group, which recorded 2006 pro-forma revenues of 17.1 billion euros, said it had submitted about 140 network bids since November.

Those were in addition to separate activities carried out by the Finnish and German parent companies on their own.

The venture says it aims to challenge the top industry players, such as Sweden's Ericsson ERICb.ST, which leads the market in mobile infrastructure

“It is a negative indication when a big player says that market growth will slow down,” said OKO Bank analyst Hannu Rauhala, adding: “It is worthwhile to compare this to Ericsson, it still has a positive outlook on the market. We will see what Ericsson will say about the matter.”

Nokia Siemens Networks had been due to start operation at the beginning of the year but was delayed by a corruption investigation at Siemens. The German conglomerate is contributing 2.4 billion euros in assets to the joint operation and Nokia will contribute 1.7 billion.

Nokia will consolidate the venture’s results in its own financial reports and Chief Executive Olli-Pekka Kallasvuo will be chairman of the board, which will have four members from the Finnish firm and three from Siemens.

(Additional reporting by Sami Torma and Terhi Kinnunen)

((Reporting by Rex Merrifield, Helsinki newsroom, editing by Paul Bolding/Rory Channing; tel +358-9-6805-0248, fax +358-9-6805-0220,

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