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Nokia Siemens Expects 'Slight' Market Growth in 2007

AP
Monday, 2 Apr 2007 | 5:28 AM ET

Nokia Siemens Networks, which began operations on April 1, said Monday it expects "very slight" market growth in 2007, downgrading earlier estimates by the two companies that formed the joint venture.

"Over the last couple of months, there has been a narrowing of visibility and indications of a slowdown in spending in some regions," Nokia said. "As a result, Nokia and Nokia Siemens Networks today are updating the outlook for the mobile and fixed services infrastructure market for 2007."

"The companies now expect very slight market growth for the mobile and fixed infrastructure and related services market in euro terms in 2007," Finland-based Nokia said.

Earlier, Nokia said it had expected "slight growth" in the market during 2007.

Nokia stock fell almost 1% to 17.10 euros ($22.77) in early trading on the Helsinki Stock Exchange. Siemens shares were up nominally by only a 10th of a percent at 80.03 euros ($106.58) in Frankfurt trading.

Nokia, the world's largest mobile phone maker and German-based Siemens, Europe's largest electronics and electrical engineering company, formed the 50-50 joint venture to produce equipment that mobile services, such as T-Mobile, Vodafone or O2, need to provide more content quickly to subscribers.

Its primary competitor is the Sweden-based industry leader Ericsson.

Nokia Siemens Networks

The company, based in Espoo near Helsinki, is made up of the Finnish cell phone maker's network business group and Siemens' carrier-related operations. It has 20,000 workers worldwide.

Nokia Siemens Networks claims to be among the top three in the field with combined revenues of more than 17 billion euros ($22 billion) in 2006, and aims to be the market leader.

"Already starting as one of the leaders of the industry, we have a clear objective: to become number one," said Simon Beresford-Wylie, chief executive officer of Nokia Siemens Networks. "We want to be the number one communications enabler for our customers. We also want to be known for operating with the highest standards of ethics and integrity."

The joint venture was delayed by a series of bribery allegations at Munich-based Siemens which prompted CEO Klaus Kleinfeld to hire an outside anti-corruption expert and a law firm to examine and revise the company's safeguards.

Several current and former workers have been questioned over the allegations, and last week Siemens executive Johannes Feldmayer was temporarily relieved of his duties following his arrest in connection with an investigation of alleged payments to the head of a labor union.

None of the investigations is related to or involves the new joint venture with Nokia.

Beresford-Wylie also said that the increasing use of the Internet would challenge the new venture to find "new ways to lower the cost of connections, particularly in the emerging markets."

"As Nokia and Siemens said when announcing the new company on June 19, 2006, we will seek estimated cost synergies of 1.5 billion euros ($2 billion) annually by 2010," he said.

From April 1, the financial results of Nokia Siemens Networks will be consolidated to Nokia.

Nokia, based in Espoo, sells phones in 130 countries and employs 68,000 people. Munich-based Siemens employs more than 460,000 people.

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