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Nokia to cut up to 14,000 jobs after sales drop a fifth
Global Banking & Finance Review®
Company
By Supantha Mukherjee
STOCKHOLM (Reuters) -Finnish telecom gear group Nokia said on Thursday it would cut up to 14,000 jobs in a new cost reduction effort after third-quarter sales fell by a fifth, taken down by sales of next-generation 5G equipment.
Nokia and rival Ericsson have grappled with slowing demand for 5G equipment in countries such as the United States, trying to offset some of the weakness with higher sales to India, a low-margin market.
Nokia is targeting savings of between 800 million euros ($842 million) and 1.2 billion euros by 2026, the deadline by which it seeks to deliver a long-term comparable operating margin plan of at least 14%.
The programme is expected to lead to an organisation with 72,000 to 77,000 employees, down from 86,000 today, the company said in a statement.
“Nokia expects to act quickly on the programme, with at least 400 million euros of in-year savings in 2024, and a further 300 million euros in 2025.”
Ericsson, which has also laid off thousands of employees this year, said on Tuesday the uncertainty affecting its business would persist into 2024.
“While our third-quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter,” Chief Executive Pekka Lundmark said.
Quarterly comparable net sales fell to 4.98 billion euros from 6.24 billion last year, missing an estimate of 5.67 billion euros according to a LSEG poll.
Nokia will move to a leaner corporate center to boost strategic focus while protecting spending on research and development, and giving more operational autonomy to business units, it said.
“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” Lundmark said.
($1=0.9493 euros)
(Reporting by Supantha Mukherjee in Stockholm; Editing by Anna Ringstrom and Clarence Fernandez)
Cost reduction refers to the process of identifying and implementing ways to reduce expenses within an organization, often to improve profitability.
Corporate strategy is the overall plan for a company, outlining how it will achieve its goals and objectives while maximizing shareholder value.
Job creation refers to the process of providing new employment opportunities, which can be driven by business expansion, new investments, or economic growth.
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