December 11, 2009 / 1:01 PM / 10 years ago

Siemens, Nokia affirm support for struggling NSN

* Nokia CEO, Siemens CFO send joint letter to NSN clients

* Say to support expenditure, acquisitions, partnerships

* Analyst says signals confidence in venture

(Adds analyst, details, background)

Reporting by Marilyn Gerlach and Tarmo Virki

FRANKFURT/HELSINKI, Dec 11 (Reuters) - Executives of Siemens AG (SIEGn.DE) and Nokia Oyj NOK1V.HE sent a rare joint letter to clients of struggling telecom gear making venture Nokia Siemens Networks [NSN.UL], affirming their support for its future.

“We continue to support investment in the future of the company, both in terms of expenditure and potential acquisitions and partnerships,” Siemens Chief Financial Officer Joe Kaeser and Nokia Chief Executive Olli-Pekka Kallasvuo said in a letter dated Dec. 9.

The letter to NSN’s customers was a signal of confidence in NSN, particularly at a time when Siemens had indicated its willingness to divest some of its non-core assets, said an analyst who declined to be identified.

A Nokia Siemens spokesman confirmed such a letter had been sent. Siemens declined to comment, while Nokia was not immediately available to comment.

The telecoms equipment market has seen cut-throat competition for new business, driven by Asian vendors such as China’s Huawei [HWT.UL], forcing Nokia to book a 908 million euro ($1.34 billion) third-quarter charge for NSN. [nLF714188] [nGEE5B20TM]

Kaeser met analysts on the same day Siemens disclosed fourth-quarter results which were pulled down by a 1.6 billion euro writedown on its stake in NSN. [nGEE5AS0DS]

He said there had been “disappointment” since the partners founded NSN in 2007, adding the two between them have a 1.5 billion euro shareholder loan to NSN.

“I would not necessarily rule out, since this is a subordinated shareholder loan, that we would convert at least part of it into equity,” Kaeser had said.

“But I would be extremely difficult to be convinced about spending materially more money from the shareholder base rather than look into other options,” he added.

Analyst Andreas Willi of J.P. Morgan said in a note late in November that Siemens had reclassified its equity investments, of which NSN is the largest, from “strategic” to “financial” last year, indicating the German conglomerate would look to exit NSN over time.

He said he believed Nokia might not be interested in buying out Siemens’ 50 percent stake as the Finnish company had also expressed an interest in reducing its exposure to NSN.

($1=.6790 Euro)

(Editing by Simon Jessop)

((Reuters Messaging: marilyn.gerlach.reuters.com@reuters.net; 00 49 69 7565 1279)) Keywords: SIEMENS NOKIA/

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