Nokia Siemens seeks over 1 bln euros in savings

By Brett Young

HELSINKI (Reuters) - Telecom equipment maker Nokia Siemens Networks unveiled a new cost-cutting programme on Tuesday, seeking to save over one billion euros ($1.48 billion) to stay competitive in the cut-throat market.

"Despite having fully achieved the original merger integration savings objectives of Nokia Siemens Networks, changes in the global economy and competitive environment make further cost reductions necessary," it said in a statement.

Telecom gear makers have been hit hard by the recession, which has crimped operator spending, as well as by tougher competition in recent years from Chinese players like Huawei and ZTE.

Market leader Ericsson last month missed forecasts with its earnings and would not say when things might improve.

NSN, a joint venture of Nokia and Siemens, said it aimed to cut 500 million euros in annual costs by the end of 2011, putting up to 5,800 of the firm's 64,000 staff at risk.

It said the programme, something analysts have speculated could come given the persistently tough market conditions, could bring total charges of some 550 million euros in 2010-11.

NSN also said it aimed for savings "substantially larger" than 500 million euros by lowering procurement costs. "This targeted reduction is expected to position the company to meet ongoing customer requirements for competitive pricing."

Nokia shares were little changed by the news, off 1.5 percent at 8.59 euros at 1200 GMT.

TOUGH BLOW

The cuts are the latest blow for the joint venture, which started operations in April 2007 and then unveiled a 1.5 billion euro cost-savings programme the following month -- later bumped to two billion -- including thousands of job cuts.

Last month, parent Nokia booked a 908 million euro charge for the third quarter due to NSN. It said NSN's markets would fall by five percent in euro terms in 2009 versus 2008, and the venture would lose more market share than expected.

NSN said on Tuesday it would shrink its five business units to three as part of the shake-up, and would consider partnerships and acquisitions to boost growth.

(Reporting by Brett Young; Editing by Dan Lalor)

($1 = 0.6769 euro)