Nokia 2011 Annual Report Download - page 127

Nokia Siemens Networks’ net sales increased 11% to EUR 14 041 million in 2011, compared to
EUR 12 661 million in 2010. The year-on-year increase in Nokia Siemens Networks’ net sales in 2011
was driven primarily by the contribution from the acquired Motorola Solutions networks assets, which
was completed on April 29, 2011. Excluding the acquired Motorola Solutions networks assets, net
sales would have increased 4% year-on-year, primarily driven by growth in services, which
represented approximately 50% of Nokia Siemens Networks’ net sales in 2011.
Gross Margin
Nokia Siemens Networks’ gross margin was 27.1% in 2011, compared to 26.8% 2010. Nokia Siemens
Networks gross margin in 2011 reflected the positive impact from the acquired Motorola Solutions
networks assets offset to a large extent by the negative effects of the competitive industry environment
and an unfavorable sales mix towards lower gross margin revenues.
Operating Expenses
Nokia Siemens Networks’ research and development expenses increased 3% to EUR 2 213 million,
compared to EUR 2 156 million in 2010. The increase was primarily due to the addition of R&D
operations relating to the acquired Motorola Solutions networks assets as well as investments in
strategic initiatives.
Nokia Siemens Networks’ selling and marketing expenses, as well as administrative and general
expenses, were virtually flat year-on-year in 2011 as the increase from the acquired Motorola Solutions
networks was offset by ongoing cost control initiatives.
Operating Margin
Nokia Siemens Networks’ operating loss in 2011 was EUR 300 million, compared with an operating
loss of EUR 686 million in 2010. Nokia Siemens Networks’ operating margin in 2011 was negative
2.1%, compared with negative 5.4% in 2010 primarily because of higher net sales, which were offset
by higher operating expenses.
New Strategy and Restructuring Program
On November 23, 2011, Nokia Siemens Networks announced its strategy to focus on mobile
broadband and services and the launch of an extensive global restructuring program. Nokia Siemens
Networks expects substantial charges related to this restructuring program in 2012. See Item 4B.
“Business Overview — Nokia Siemens Networks — New Strategy and Restructuring Program”.
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