Nokia 2012 Annual Report Download - page 43

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 broadband
infrastructure and related services market, our business and results of operations, particularly
profitability, and financial condition 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-cost
competitors, price reductions by existing competitors or otherwise, our business, sales, results of
operations, particularly profitability, and financial condition may be materially adversely affected.
Nokia Siemens Networks’ restructuring plan to improve financial performance and
competitiveness may not lead to sustainable improvements in Nokia Siemens Networks’ overall
competitiveness and profitability, and it may be unable to otherwise continue to reduce
operating expenses and other costs. Additionally, changes in the ownership structure of Nokia
Siemens Networks could have an adverse effect on Nokia Siemens Networks or us.
In November 2011, Nokia Siemens Networks announced a new strategy, including changes to its
organizational structure and an extensive global restructuring program, aimed at improving its
competitiveness and profitability. The restructuring program also includes a target to reduce Nokia
Siemens Networks’ annualized operating expenses and production overheads, excluding special items
and purchase price accounting related items, by more than EUR 1 billion by the end of 2013,
compared to the end of 2011. Together with a range of productivity and efficiency measures, Nokia
Siemens Networks’ has targeted headcount reductions intended to align the workforce with its strategy.
Nokia Siemens Networks will also continue to target areas such as real estate, information technology,
product and service procurement costs, overall general and administrative expenses, and a significant
reduction in suppliers in order to further lower costs and improve quality. The execution of its
restructuring program is subject to certain risks and uncertainties, including:
• Developing and implementing the restructuring plan have consumed and will continue to
consume significant time, attention and resources of management.
• Personnel reductions may result in reduced productivity and dissatisfaction and loss of morale
among employees and lead to loss of key personnel. These factors may have a more
pronounced adverse impact due to prior restructuring measures. Although Nokia Siemens
Networks has not experienced strikes in the past, it may face labor unrest, strikes or work
stoppages as a result of increased dissatisfaction among its employees resulting from the
ongoing and past restructuring measures.
• There can be greater than expected difficulties from legal, regulatory or other matters that limit
Nokia Siemens Networks’ ability to implement the restructuring as planned or adversely
impact the associated costs.
• If Nokia Siemens Networks fails to implement its restructuring 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.
• The costs, cash outflows and charges related to the implementation of the restructuring plan,
including the planned personnel reductions, divestments of non-core businesses, the
termination of unprofitable contracts and exiting certain countries, such as Iran, or areas may
be greater than currently estimated.
• Nokia Siemens Networks cannot guarantee that it will achieve or sustain the targeted
benefits, which could result in further restructuring efforts. In addition, Nokia Siemens
Networks cannot guarantee that the benefits, even if achieved, will be adequate to meet its
long-term growth and profitability targets.
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