Nokia to cut up to 14,000 jobs in dire warning about market

Chill winds are blowing over the Nordic countries and their network-equipment-making giants. Just two days after Sweden’s Ericsson published a gloomy set of results, Finland’s Nokia served up further misery for investors and staff. “Pretty serious,” was how CEO Pekka Lundmark described the current frostiness on a call with reporters, downplaying hopes of a big improvement next year. In response, he has announced swingeing cuts that will claim up to 14,000 jobs.

Over the next three years, his latest target is to reduce annual costs by between €800 million (US$843 million) and €1.2 billion ($1.3 billion). It’s a move that will reduce Nokia’s headcount by at least 9,000 roles from its current level of roughly 86,000. And at the upper end of the range, it will see an exodus of 14,000 employees, more than 16% of the total. Nokia was at its biggest in 2018, less than two years after completing its Alcatel-Lucent takeover, when it had a workforce of nearly 104,000 people. By 2026, under the latest plans, more than 30% of those jobs could have disappeared.

“You saw our main mobile networks competitor present similar or even worse figures for North America,” Lundmark commented on Ericsson when challenged about the need for such extreme cuts. “We are simply not able to judge at the moment when exactly the market will start to recover, so that’s why we cannot sit and wait. We have to take action to take care of our profitability.”

Nokia’s research-and-development activities will be shielded from any of the cuts, but Lundmark declined to provide further details on where the axe would fall while consultations with staff representatives are ongoing. What he could reveal is that his latest restructuring plans will move salespeople out of larger teams serving multiple units and embed them within specific business groups.

“We will have dedicated sales teams with strong product and customer connections that will enable the business groups to better seize growth opportunities and diversify into enterprise, webscale and government sectors,” he said. “As a result, customers will work with highly empowered Nokia teams that are able to make quicker decisions based on their needs.”

Indian winter

Headline figures are certainly not pretty for the recently ended third quarter. Sales dropped by a fifth (although 15% on a constant-currency basis), to about €4.9 billion ($5.2 billion), compared with the year-earlier quarter, and reported profits were down 69%, to just €133 million ($140 million). On a comparable basis, Nokia’s operating margin shrank from 10.5% for the third quarter of 2022 to 8.5%.

The mobile business in North America, where Nokia and Ericsson generate a sizeable chunk of their profits, is evidently the biggest problem. In Nokia’s case, sales for both the second and third quarters were 40% lower than in the year-earlier periods as big telcos slashed capital expenditure and made do with existing supplies. A major 5G rollout in India had helped to compensate earlier in the year, but even this now seems to be slowing down.

To read the complete article, visit Light Reading.