Nokia 2006 Annual Report Download - page 35

joint key customer program. Nokia and Siemens will contribute certain intellectual property owned
by each of them to Nokia Siemens Networks. Any of Nokia’s or Siemens’ retained IP which is also
needed by Nokia Siemens Networks will be licensed to it, including the names ‘‘Nokia’’ and
‘‘Siemens’’.
Nokia and Siemens will provide a EUR 1.0 billion subordinated credit facility to Nokia Siemens
Networks, with the commitment to be split equally, in the form of a threeyear multidrawn down
cash advance nonrevolving facility at a commercial rate of interest. The Board of Directors of Nokia
Siemens Networks will be comprised of seven directors, four appointed by Nokia and three by
Siemens. Nokia will appoint the CEO of Nokia Siemens Networks.
Nokia Siemens Networks is expected to start its operations around the end of March, 2007 subject to
the satisfaction or waiver of the conditions to the merger, including achievement of agreement
between Nokia and Siemens on the results and consequences of a Siemens compliance review, and
the agreement of a number of detailed implementation steps.
See ‘‘Item 3.D Risk Factors—Currently expected benefits and synergies from forming Nokia Siemens
Networks may not be achieved to the extent or within the time period that is currently anticipated.
We may also encounter costs and difficulties in integrating our networks operations, personnel and
supporting activities and those of Siemens, which could reduce or delay the realization of
anticipated net sales, cost savings and operational benefits.’’ See also ‘‘Item 3.D Risk Factors—The
Siemens carrierrelated operations to be transferred to Nokia Siemens Networks are the subject of
various ongoing prosecutorial investigations related to whether certain transactions and payments
arranged by some current or former employees of those operations violated applicable laws. As a
result of those investigations, government authorities and others could take actions against Siemens
and/or its employees that may involve and affect the carrierrelated assets and employees
transferred by Siemens to Nokia Siemens Networks, or there may be undetected additional violations
that may have occurred prior to the transfer, or ongoing violations that may occur after the transfer,
of such assets and employees that could have a material adverse affect on Nokia Siemens Networks
and our business, results of operations, financial condition and reputation.’’
Sales and Marketing
In 2006, Nokia’s sales and marketing expenditure was EUR 3.3 billion, representing 8.1% of net sales.
Sales
The Customer and Market Operations horizontal group is responsible for the sales of Nokia’s mobile
devices from the Mobile Phones, Multimedia and Enterprise Solutions business groups. Most of our
mobile device business derives from sales to operators, distributors, independent retailers, corporate
customers and endusers. However, the percentage of the total device volume from each channel
varies by region. In the AsiaPacific area, distributors and retailers account for more than half of the
total device volume. In China, mobile devices are sold almost solely through the retail channel. In
Europe and the Middle East & Africa, sales are split approximately equally between operators and the
other channels. In Latin America and North America, operator sales represent the major percentage
of our sales.
Each of our active operator and distributor customers is supported by a dedicated Nokia account
team. In addition, we have customer executive teams with Nokia Group Executive Board members as
the customer executives for the largest global operators, covering both our mobile device and
networks businesses.
We also have specialized sales channels for certain business groups in order to reach customers in
segments where we are introducing mobility. Each of these channels is specific to, and managed by,
an individual business group. For example, Enterprise Solutions manages sales of its products and
solutions to certain resellers or systems integrators who contribute value, such as consulting services
or additional software, before distribution.
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