Nokia Siemens Networks, the telecommunications gear joint venture between Siemens and Nokia, is running out of options. The Wall Street Journal reported this weekend that the companies couldn’t find a private equity buyer for the gear maker, and that they were thinking of putting more money into the entity. However, throwing good money after bad doesn’t seem like it will do any good.
The partnership between the two companies began five years ago, but in the past few years, competition from Huawei and ZTE has whittled away at its market, consolidation has compressed the sector, and the rise of a monolithic standard (LTE) on the wireless side has made it hard for the equipment market to support a multitude of vendors. We have seen Alcatel-Lucent struggle, Nortel go bankrupt and even Motorola sell off elements of its wireless gear business.
So as Nokia and Siemens ponder their options, funneling more money into this business doesn’t seem like the way to go. Nokia sent Reuters a statement after the Journal‘s article appeared, noting, “Multiple options continue to exist for NSN and these are reflective of the company’s performance in terms of both innovation and financial results.”