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Summary:

Looks like Nokia and Siemens are stuck with their joint venture in a telecommunications equipment company. Nokia Siemens Networks Wednesday said it had completed its review of private equity bids and decided to recommit to each other.

NSN's headquarters.

NSN's headquarters.

I guess Nokia and Siemens are stuck with their joint venture in a telecommunications equipment company. Nokia Siemens Networks Wednesday said it had completed its review of private equity bids and decided to recommit to each other. In less romantic terms, it means no one offered enough money, so Nokia and Siemens may have to pony up more money to keep NSN afloat.

Last month, a story in the Wall Street Journal cited the company’s problems finding buyers and said the parent companies might have to put in more capital — something the struggling Nokia may find hard to swallow. Wednesday, the company confirmed it, saying in a press release:

“We believe that the current shareholders are in the best position to further enhance the value of the company,” said Olli-Pekka Kallasvuo, chairman of Nokia Siemens Networks.

Nokia Siemens Networks has made good progress in its turnaround plan, with first quarter 2011 results marking a third successive quarter of year-on-year reported net sales growth, as well as a fifth quarter of non-IFRS operating profits since it announced its change in strategy in November 2009.

The question is whether Nokia can afford to pony up more cash for a business stuck in a consolidating and more competitive environment thanks to the growth of Chinese equipment companies Huawei and ZTE. We have seen Alcatel-Lucent struggle, Nortel go bankrupt and even Motorola sell off elements of its wireless gear business (to NSN no less). Sounds kind of like a money pit.

Image of NSN’s HQ courtesy of NSN.

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  1. Hard to see how (the last) five consecutive quarters of non-IFRS profit and ostensibly successful turnaround make the company a future money pit. Parent companies have squeezed NSN hard to cut costs and it just might be working. More probable, as several analysts have today mentioned, that this was just the absolute worst time to proffer portions of NSN for sale and private equity valuations didn’t make any sense. Both parents might want out but NSN (and shareholders) may be better served with this outcome.

  2. This is too bad, a merger of Nokia and Siemens will have brought out one of the best Mobile Phone Producers. It will have been awful with their technological merger, Still possible though

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