Nov. 3 (Bloomberg) -- Nokia Siemens Networks plans to slash as many as 5,760 jobs in the second round of cuts since the joint venture between Nokia Oyj and Siemens AG was created.

The world’s second-largest maker of telecommunications equipment may eliminate 7 percent to 9 percent of its 64,000 positions, the Espoo, Finland-based company said in a statement. The company aims to save 500 million euros ($732 million) in operating expenses annually by the end of 2011.

Chief Executive Officer Rajeev Suri, named to lead Nokia Siemens in September, will combine five units into three as he struggles to stem eroding market share. Nokia wrote down the value of the business last quarter as the venture’s revenue for base stations and other gear fell 20 percent and it posted an operating loss of 53 million euros amid falling demand and price competition from Ericsson AB and Huawei Technologies Co.

“To generate higher profits they need to cut even more costs and they need for sales to improve,” said Mats Nystroem, a Stockholm-based analyst at SEB Enskilda.

Network-equipment suppliers have suffered as the economic slump cut demand at phone operators, who capped or postponed spending. Ericsson AB, Nokia Siemens’ larger rival, posted a 71 percent drop in third-quarter profit, while Alcatel-Lucent SA’s loss more than quadrupled. The companies are cutting costs to boost profits.

“It’s not just about the headcount review, it’s also about cost reduction in real estate, in IT, in optimization of sites, and about overall general and administrative expenses,” Suri said. “On top of this we are continuing to target purchasing savings.”

New Structure

After the reorganization, Nokia Siemens will have an equipment unit, a services division and a new-businesses operation that does consulting and systems integration. Marc Rouanne will head the equipment unit and Juergen Walter will head the consulting unit. Ashish Chowdhary will continue to lead services, which is Nokia Siemens’ fastest-growing business.

The new organization “is going to be differentiating for us,” as Nokia Siemens seeks to sell services development and research as well as technical work, Suri said.

The joint venture started in 2007. It completed a 15 percent reduction of its initial workforce last year.

Nokia Siemens’s market share fell to 20 percent in the second quarter from 26 percent a year earlier. Ericsson led with 32 percent. Nokia Siemens posted losses of more than 1.6 billion euros in the previous two years.

Acquisitions

“Ericsson is holding up their market share quite well and the Chinese vendors are taking market share from Nokia Siemens and Alcatel-Lucent,” said Jan Ihrfelt, a Stockholm-based analyst at Swedbank. “That battle has been going on for some years now.”

Suri declined to say when the company could return to growth, saying Nokia Siemens wouldn’t give market guidance before the Nokia capital markets day in December. He repeated a forecast that the equipment market will contract 5 percent this year. He also would not give details on the job cuts.

Siemens said in September that it will need to take “a very close look” at its own goodwill for the venture, which is about 1.6 billion euros. Both parents continue to support the venture with capital, Nokia Chief Executive Officer Olli-Pekka Kallasvuo said at the company’s third-quarter earnings conference on Oct. 15.

Suri plans to expand through acquisitions and partnerships at the same time as he cuts existing operations, according to today’s statement. Nokia Siemens seeks assets that will help increase market share in existing businesses and focus on improving relationships with important customers, it said.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

Last Updated: November 3, 2009 12:57 EST