Nokia 2010 Annual Report Download - page 35

reductions. The plan also included a global personnel review which resulted in personnel reductions.
Implementation of the plan is continuing. In addition, Nokia Siemens Networks otherwise seeks to
reduce operating expenses and other costs on an ongoing basis.
Executing this plan has consumed and may continue to consume significant time, attention and
resources of Nokia Siemens Networks’ management which could negatively impact Nokia Siemens
Networks’ business. Personnel reductions may result in reduced productivity and dissatisfaction
among employees and lead to loss of key personnel. These factors may have a more pronounced
adverse impact due to Nokia Siemens Networks having been subject to various restructuring
measures in the past. If Nokia Siemens Networks fails to execute its plan successfully or to otherwise
reduce its operating expenses and other costs on an ongoing basis, its market share may decline
which could result in the loss of scale benefits and reduce competitiveness and its financial
performance may deteriorate.
Nokia Siemens Networks is a company jointly owned by Nokia and Siemens and consolidated by
Nokia. Accordingly, the financial performance of Nokia Siemens Networks, including the announced
measures targeted to improve its financial performance, may also require further support from the
shareholders of Nokia Siemens Networks in the form of additional financing, guarantees, consents or
agreements by the shareholders regarding measures planned by its management, or through other
means. Nokia and Siemens do not, however, guarantee Nokia Siemens Networks’ current financial
obligations. If Nokia Siemens Networks fails to achieve such support from its shareholders, our
business, results of operations and financial condition could be materially adversely affected.
In addition, Nokia Siemens Networks has received expressions of interest from private equity firms
seeking to invest. There can be no assurance that such expressions of interest will result in any
further investment in Nokia Siemens Networks, nor can there be any assurance that the ownership of
Nokia Siemens Networks will, or will not, change in the future or any new shareholder will provide
any support to Nokia Siemens Networks.
Competition in the mobile and fixed networks infrastructure and related services market is
intense. Nokia Siemens Networks’ may be unable to maintain or improve its market position
or respond successfully to changes in the competitive environment.
The competitive environment in the mobile and fixed networks infrastructure and related services
market continues to be intense and is characterized by equipment price erosion, a maturing of
industry technology and intense price competition. Moreover, mobile network operators’ cost
reductions are reducing the amount of available business resulting in increased competition and
pressure on pricing and profitability. Overall, participants in this market compete with each other on
the basis of product offerings, technical capabilities, quality, service and price. Nokia Siemens
Networks competes with companies that have larger scale and higher margins affording such
companies more flexibility on pricing, while some competitors may have stronger customer finance
possibilities due to internal policies or governmental support, for example in the form of trade
guarantees, allowing them to offer products and services at very low prices or with attractive
financing terms. Nokia Siemens Networks also faces increasing competition from the entry into the
market of low cost competitors from China, which endeavor to gain market share by leveraging their
low cost advantage in tenders for customer contracts. Competition for new communication service
provider customers as well as for new infrastructure deployments is particularly intense and focused
on price. In addition, new competitors may enter the industry as a result of acquisitions or shifts in
technology. If Nokia Siemens Networks cannot respond successfully to the competitive requirements
in the mobile and fixed networks infrastructure and related services market, our business and results
of operations, particularly profitability, may be materially adversely affected.
Nokia Siemens Networks seeks to increase sales in geographic markets in which price competition is
less intense. If Nokia Siemens Networks is not successful in increasing its sales in those markets or
the price competition in those markets intensifies, as a result of the entry into those markets of low
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