Nokia to Shed 14,000 Workers in Cost-Cutting Drive

Helsinki: Telecom gear maker Nokia has announced to reduce its workforce by up to 14,000 jobs following a 19% decline in third-quarter sales. The Finnish company’s network infrastructure and mobile networks divisions both plummeted in sales, primarily due to sluggish sales of 5G equipment in markets like North America. “Resetting the cost base is necessary to adjust to market uncertainty and secure our long-term profitability and competitiveness,” Nokia CEO Pekka Lundmark said.

Lundmark added that he expects Nokia’s sales to decline by 9% this year. He blamed telecom operators’ lower-than-expected demand for network equipment, which he said were facing macroeconomic challenges such as high inflation and interest rates. He also pointed to slower growth in India, a crucial market for Nokia because of 5G deployments by Reliance Jio and Bharti Airtel.

This moderation in the Indian 5G market could not offset a decline in North American orders, according to Lundmark. The company has also struggled with consumers and operators avoiding smartphones that run on the Symbian operating system, which it no longer manufactures, instead choosing to buy devices made by other vendors such as Apple and Samsung. Its Lumia smartphones have won critical acclaim, but the products’ sales need to be more robust to compensate for declines in the central business.

The job cuts will save Nokia 800 million euros to 1.2 billion euros from 2024 to 2026, resulting in an organization with between 72,000 to 77,000 employees, as opposed to the current workforce of 86,000 at Nokia, the news agency Reuters reported. The company also plans to close research and development centers in Ulm, Germany, Burnaby, Canada, and a handset factory in Salo, Finland. The company said it will also give its four business groups more operational autonomy, which should help them focus on customer needs and boost revenue.

Nokia will replace its executive team, including the company’s two top shareholders, Juha Putkiranta and Timo Toikkanen, and the head of finance and chief accounting officer, Jukka Savander. The new team will have an initial mandate of 12 months.

Nokia’s stock dropped about 7% on the Helsinki exchange after the company’s results were published, and the company’s shares have lost 33% in value this year. The stock’s fall has been accelerated by investors’ concerns over a global economic slowdown and the decline in spending by telecom operators on network equipment. Nokia and its Swedish rival Ericsson have seen their sales stall due to a shift in demand from higher-margin 5G work in early-mover markets like North America to lower-margin developing regions like India. The two companies have also been hurt by a general slowdown in global smartphone sales, reducing the demand for their wireless base stations and other networking gear. The downturn has hit the number of phones sold and their average price. It has prompted some of the world’s biggest mobile operators to rethink their 5G rollout plans and delay the launch of services.

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