GigaOM » Job Cuts

Nokia Siemens sells optical biz to hone its 4G focus

Kevin Fitchard — Mon, 03 Dec 2012 17:13:54 +0000

Telecom equipment maker Nokia Siemens Networks is shedding one of its last ties to wireline networking as part of its strategy to become a 4G specialist. On Monday, the vendor announced it is selling its optical networking business to Marlin Equity Partners, a Los Angeles-based private equity outfit, for an undisclosed sum.

NSN revealed its plans to become a lean, mean 4G machine last November, when it announced a restructuring plan involving 17,000 job cuts and the shedding of any business unit unrelated to its core mobile broadband strategy. It quickly sold off its wireline access business to Adtran and its mobile backhaul unit to DragonWave. NSN’s carrier business support systems (BSS) software division is also rumored to be on the auction block with both Ericsson and Amdocs as potential bidders.

NSN, however, chose to hold onto its optical business, saying it fit with its 4G goals, but it now appears to have changed its mind. Here’s Ovum network infrastructure analyst Dana Cooperson’s take:

“When Nokia Siemens Networks announced its updated strategy about a year ago it said it was focusing its business on mobile broadband but needed to keep its optical group as a complement. This struck Ovum as odd: its strongest position in optical (it’s ranked 10th globally in the $14.9B market with just under $500M annual sales) is in the network core, where there is little connection with MBB. Furthermore, NSN’s optical business has been slipping for years with no clear plan to improve; it has not done the kind of fundamental R&D that its main competitors (e.g., Alcatel-Lucent, Ciena, Cisco Systems, Huawei Technologies) are doing.”

It’s unclear what a private equity firm will do with a global optical equipment unit, but Cooperson said Marlin’s goal may just be to flip the business over to one of NSN’s competitors, possibly Juniper Networks.

NSN 4G focus, however, appears to paying dividends. At the time of its restructuring announcement, NSN had just acquired Motorola’s commercial networks businesses, it was running short of operating cash, and it had missed out on some of the initial major LTE contracts. But in the last year it has emerged as a big 4G contender, winning key carrier deals in Asia and posting record profits in the third quarter.

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Battered by the global LTE war, Alcatel-Lucent will cut 5000 jobs

Kevin Fitchard — Thu, 26 Jul 2012 19:27:06 +0000

The global race against its old enemies Ericsson, Nokia Siemens Networks and new rival Huawei, is taking its toll on Alcatel-Lucent. The Franco-American vendor revealed on its second quarter earnings call that it would cut 5000 jobs by the end of 2013 in a new retrenchment effort.

The cuts aren’t as severe as the 17,000 layoffs Nokia Siemens announced in December, but they represent 7 percent of Alcatel-Lucent’s total employee base. At the company’s earnings call on Thursday, CEO Ben Verwaayen didn’t name specific divisions or regions targeted for pink slips, but he said the cuts would be across the company, including in its home country of France.

Alcatel-Lucent makes both wireline and wireless gear, but it has struggled in particular to make the transition from older 3G mobile technologies to new 4G networks. Alcatel-Lucent has always been dominant in CDMA, but investment in older 2G and 3G technologies has dwindled as carriers look to LTE. While Alcatel-Lucent bridged that generational gap in the U.S. quite easily – landing major pieces of Verizon, AT&T and Sprints’ LTE contracts – it has seen much less success in international markets, ceding market share to its three main rivals.

North America accounts for 39 percent of Alcatel-Lucent’s sales, and those sales were down 8.3 percent in the second quarter to €1.4 billion (U.S. $1.7 billion), contributing to its €254 million loss.

According to a recent ABI Research study, Nokia Siemens is the now world’s leading LTE vendor in terms of new contracts and intellectual property. Ericsson and Huawei, which are battling for the title of largest overall telecom vendor, ranked second and third respectively. Alcatel-Lucent came in fourth in an LTE market that many believe can only support two or three primary equipment makers.

Verwaayen, however, did identify one source of revenue the vendor plans to tap. He said Alcatel-Lucent would create a separate business division to manage its 44,000 patents, which could have substantial value. Alcatel-Lucent still owns Bell Labs, the industrial research giant created by the old AT&T monopoly and the wellspring of many of the world’s most important tech inventions. Bell Labs is a shadow of its former self, having seen its once mammoth applied research budget slashed, but it developed many of the key innovations that went into today’s optical and wireless networks.

Image courtesy of matthi / Shutterstock.com

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Nokia’s secret Linux team is looking for refuge

David Meyer — Thu, 28 Jun 2012 11:32:04 +0000

When Nokia announced massive job cuts a couple of weeks ago, one of the targets was the company’s research facility in Ulm, Germany. Now, showing impressive entrepreneurialism, the axed team members have set up a campaign advertising their talents:

“In response to our recent Ulm site closure announcement from Nokia HQ, we (the employees) openly invite you to discover our world of talent on offer,” a flyer on their new website reads. “Welcome to Project KYVYT’.”

Nokia’s Ulm research facility employed 730 people, so that’s a lot of talent (or, in Finnish, kyvyt) on offer. But what were they working on?

According to Finnish business news service Taloussanomat, the Ulm team was developing Meltemi. If you don’t know what that is, there’s a reason for that.

Meltemi was an operating system for low-end smartphones. Nokia never actually acknowledged its existence, but it was axed in the June cuts. The Linux-based OS was most likely an insurance policy in case Nokia’s big Windows Phone tie-in didn’t work out, but now Nokia’s going to start making cheaper Windows Phones too. Given that Symbian’s not quite dead yet at the low end, you can see how three platforms in roughly the same segment might be a bit much.

Of course, if anyone does want to take the idea of a lightweight, open-source OS further, Project KYVYT has just the right people for you. After all, those behind the site say they will be posting “team profiles for investors” as well as personal CVs, so it’s quite likely that they could come as a package.

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T-Mobile USA starts round 2 of layoffs, cutting 900 jobs

Kevin Fitchard — Tue, 15 May 2012 22:42:27 +0000

When T-Mobile USA laid off thousands of workers in March, it wasn’t quite done handing out the pink slips. On Tuesday T-Mobile said it would enter into its next phase of restructuring, which means 900 more layoffs on top of the 1900 job cuts it has already made.

Here’s T-Mobile statement:

“T-Mobile previously announced its intent to restructure and optimize operations throughout the company in order to best reposition the company, given today’s demanding and rapidly evolving marketplace.

This week we are communicating to our employees a series of additional organizational changes to best position T-Mobile to powerfully compete and return to growth.

We are restructuring the organization and optimizing operations so that we can make critical decisions better and faster in response to market and customer demands. Further, by reducing our cost structure and streamlining operations, T-Mobile will be able to invest in areas where we anticipate the strongest return: modernizing our 4G network; aggressively pursuing the B2B segment; and re-launching our brand.

These changes resulted in a restructuring of key functions and departments across the company including the elimination of some positions and the outsourcing of others. While difficult choices had to be made, restructuring our organization will help us better respond to market and customer demands and bring opportunity for continued career development and growth for many of our employees. We appreciate the contributions of our affected colleagues and will provide them with assistance and support during this transition.”

In the last round, T-Mobile cut 3300 jobs as it consolidated 24 regional call centers into 17. It hired 1900 new staff in the remaining call centers, resulting in a net cuts of 5 percent of its workforce.

T-Mobile image courtesy of Flickr user swruler9284

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Reports: 800 More Job Cuts at Microsoft

Sebastian Rupley — Wed, 04 Nov 2009 17:49:54 +0000

Microsoft officials have confirmed that the company is making another round of job cuts today, according to reports from TechFlash and PaidContent. Rumors of the cuts have been widely circulated. The software giant is eliminating 800 jobs around the world, TechFlash reports, citing Microsoft spokesman Lou Gellos as saying that the cumulative number of layoffs go beyond the planned 5,000 cuts announced in January. About a quarter of the job cuts are reportedly in Washington, where Microsoft’s headquarters are. While early reports on adoption of the company’s new Windows 7 operating system are positive, the latest round of cuts may still have to do with the mobile tech-related reasons for staff reductions that the company cited in January. UPDATE: Microsoft employees are now confirming online that they’ve been let go–more below the fold.

In January, Microsoft announced plans to cut 5,000 jobs following a $465 million shortfall in OEM revenue. According to the company’s 10-Q filing from then:

The decline in OEM revenue reflects an 11 percentage point decrease in the OEM premium mix to 64 percent, primarily driven by growth of licenses related to sales of netbook PCs, as well as changes in the geographic and product mixes.

The fact that profit margins are razor thin in the red-hot netbook category has plagued Microsoft all year, and the company’s Windows Mobile strategy is showing signs of profound weakness. While our calls for confirmation of the latest round of job cuts have yet to be returned, it’s entirely likely that the shrinking level of opportunity that Microsoft has in the mobile arena continues to be the explanation for staff reductions. We will update this report as more details become available.

UPDATE: Don Dodge, from Microsoft’s Emerging Business Team, has confirmed on his blog that he was among the employees let go today. “This was a total surprise to me, and management offered no explanation,” he reports.

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YouTube to Rent Movies?

Chris Albrecht — Wed, 02 Sep 2009 22:29:06 +0000

YouTube is in talks with Hollywood studios about renting movies through the video-sharing site, according to the Wall Street Journal‘s sources. From the Journal:

Now YouTube is talking to Lions Gate Entertainment Corp., Sony Corp. and Warner Bros. about integrating newer titles into the existing YouTube site, most of which it would carry a rental charge. In some cases, these titles might be available on the site on the same day that they come out on DVD. It is unclear to what extent older movies or television shows will be part of the new agreements.

Movies would be streamed and would reportedly cost $3.99 (though the Journal doesn’t say it, at this price point, movies would probably be in standard definition) to keep it on par with other rental services like Apple’s iTunes and Amazon VOD. There could even be instances in which YouTube streams the movies for free with advertising.

Interestingly, the Journal says a test will be conducted with 10,000 Google employees, which would be half of the search giant’s workforce, according to Hoover’s data. The test was supposed to start this September but was delayed as negotiations continued.

Google CEO Eric Schmidt indicated in April that YouTube would experiment with “micropayments and other forms of subscription models,” so if true, this news would certainly fall in line with that.

YouTube has been pushing its way into premium full-length content for a while now, but success has been a mixed bag. The video site streamed Sony movies like Ghostbusters via Crackle, and also has existing partnerships with MGM and Lionsgate. Two recent deals with Warner Bros. and Disney resulted in only short-form clips. The site did recently run in full through Sony’s Crackle.

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With AT&T Job Cuts, Telco Recession is Official

Om Malik — Thu, 04 Dec 2008 15:30:33 +0000

[qi:011] AT& T announced this morning that it is going to cut 12,000 jobs, or 4 percent of its workforce, joining a long list of companies that are making cuts in response to the economy’s growing woes. These job cuts are not a surprise, because AT&T is seeing its wireline customer base eviscerated. The cuts will be rolled out in December and through 2009, though the company might add positions in its wireless and broadband business. The company said it is going to cut its capital spending as well. With this news, there is no denying it: A full-scale recession has hit the telecom sector, as I had outlined last month.

UBS Research estimates that AT&T could cut its capex by more than 10 percent in 2009, much higher than previously expected 4 percent cuts. All these cuts are going to roll down hill to the equipment vendors. Ciena, for instance, is one company that is going to get hit hard, because AT&T accounts for nearly 25 percent of its revenues. Adtran and ADC Telecom, other AT&T customers, could be hit hard as well. Other carriers, facing similar pressure, are going to follow suit and cut their spending on wireline businesses; at the same time they could also reconsider their spending on video rollouts. UBS is forecasting an overall telco decline of around 7 percent. U.S. cable companies’ capex could be down 5-10 percent.

This week, Time Warner Cable’s chief financial officer, Rob Marcus, warned that his company is expecting a dip in video, high-speed Internet and telephony subscribers in 2009 as the economy tanks. No surprise — widespread layoffs in the New York area, especially at the Wall Street firms and banks, is going to impact its customer base. Nascent competition from Verizon is only going to cause more problems for this company.

As another data point for the general malaise, Infonetics Research today released a report that shows that sales of service provider switches and IP core and edge routers dropped 4 percent sequentially to $3.3 billion in the third quarter of 2008. Sales were up 21 percent from the third quarter of 2007, however. Apparently Cisco is losing some market share to Juniper Networks, Huawei, NEC, and Alcatel-Lucent. Infonetics is predicting that the service provider telecom capex will contract in 2009.

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The Very Human Cost of Job Cuts

Om Malik — Sun, 16 Nov 2008 02:34:03 +0000

The global economic downturn has started to take its toll on Silicon Valley, especially since the news of an emergency meeting Sequoia Capital held for its entrepreneurs, asking them to buckle up for the nausea-inducing ride that lay ahead of them. In the weeks that have gone by since, we have seen waves of job cuts – 20,000 or so, by some estimates. Whether it is Sun Microsystems, Yahoo, eBay or Jobster — they are all shedding jobs.

The news of the layoffs has a tinge of morbid glee. American writer Russell Baker once wrote, “Misery no longer loves company. Nowadays it insists on it.” Perhaps we try and use the cacophony to turn a blind eye to the human cost of these cuts.

This weekend, when details emerged on the news that three executives at a Santa Clara, Calif.-based chip startup, SiPort, were shot dead by Jing Hua Wu, an employee recently laid off from the company, I like many others was forced to face the harsh and dark side of the job cuts. In a few random shots, four families were destroyed forever. The sad episode is weighing heavily this weekend. Join me in saying a silent prayer for the families of these three victims.

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