Telecom giant Nokia and conglomerate Siemens are moving to restructure a joint venture in telecommunications networking equipment after failing to acquire a controlling stake in it.
The Wall Street Journal reports that four-year-old Nokia Siemens Networks, which is unprofitable and lost almost $1 billion last year, may instead require the infusion of more cash by both companies.
A quick play-by-play:
- One private-equity group, which included Kohlberg Kravis Roberts & Co. and TPG Capital, dropped out of the auction awhile back.
- Attempts to sell a controlling stake to a consortium that includes Gores Group and Platinum Equity are stalling.
- Nokia Siemens seems wary of striking a deal because the latter firms are known for investing in distressed assets.
It's an even 50-50 split in the venture between Nokia and Siemens, but the former has four of the seven board seats.
The issue? The $3 billion business has been an albatross on Nokia's back for the better part of a year, adding to its known smartphone woes. Despite solid revenue figures for three straight quarters, the venture has posted significant operating losses -- €686 million last year, €1.6 billion the year prior.
It's also facing considerable competition from Ericsson. Meanwhile, an impatient Siemens is waiting in the wings and could very well take control of the venture to get things moving.