Will the Siemens Purchase Strain Nokia’s Mobile Unit?

Nokia Corp.’s (NYSE:NOK) announcement yesterday to acquire Siemens’ (NYSE:SI) entire 50 percent stake in their joint venture, Nokia Siemens Networks, has analysts wondering how the company, with a long-term junk credit rating, fierce competition in the smartphone market, and recurrent network business, will cover losses at its mobile phone unit.

Global leader in mobile communications, Nokia, paid 1.7 billion euros to gain full control of Nokia Siemens Networks (NSN). The transaction is expected to close during the third calendar quarter of 2013. Upon closing of the planned acquisition, NSN will become a wholly-owned subsidiary of Nokia. President and CEO of Nokia, Stephen Elop, said, “NSN has established a clear leadership position in LTE (long-term evolution), which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group.”

Joe Kaeser, Siemens Chief Financial Officer, added, “With this transaction, we continue our efforts to strengthen our focus on Siemens’ core areas of energy management, industry and infrastructure as well as healthcare.  The full acquisition of NSN by Nokia offers an attractive opportunity to actively shape the telecom equipment market for the future and create sustainable value.”