Nokia to cut up to 14,000 jobs after profits drop
Finnish telecom giant Nokia said Thursday it could cut its workforce by as many as 14,000 people after it reported lower-than-expected third-quarter profits.
"In the third quarter we saw an increased impact on our business from the macroeconomic challenges," CEO Pekka Lundmark said in a statement.
Nokia's savings program is expected to reduce the firm's employees to as low as 72,000, reducing costs by up to 1.2 billion euros ($1.14 billion) by 2026, the company said.
The program targets business areas Mobile Networks, Cloud and Network Services and corporate functions.
Nokia reported that its profits reached 133 million euros in the third quarter, a 69 percent drop from the same period a year ago.
"The earnings were much weaker than expected and the outlook is more uncertain. So it's not looking that good in the short term for Nokia," Atte Riikola, an analyst at equity analysis firm Inderes, told AFP.
The telecommunications equipment maker, which is locked in a battle for 5G networks with Swedish rival Ericsson and China's Huawei, said its sales dropped by 20 percent to 4.98 billion euros in the third quarter compared to 2022.
"We saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America," Lundmark said.
Despite the uncertainty in the third quarter, Nokia expects to see "improvement in our network businesses in the fourth quarter."
But Riikola believed that Nokia's "estimates will come down pretty dramatically."
"There's a possibility for a negative profit warning," he added.
© 2023 AFP
Nokia plans to cut up to 14,000 jobs after sales and profits plunge in a weak market
The Associated Press
,HELSINKI — Telecom gear maker Nokia said Thursday that it is planning to cut up to 14,000 jobs worldwide, or 16 per cent of its workforce, as part of a push to reduce costs following a plunge in third-quarter sales and profit.
The Finnish company, one of the world’s main suppliers of high-speed 5G wireless networks, said it's trying “to navigate the current market uncertainty" as higher interest rates take a toll.
The company said it is aiming to slash 800 million euros (US$843 billion) to 1.2 billion euros in costs by the end of 2026. That is expected to lead to a reduction from 86,000 employees to between 72,000 and 77,000 over that time period.
Nokia’s third-quarter sales plummeted 20 per cent, to 4.98 billion euros from 6.24 billion in the same three-month period last year. Comparable net profit plunged to 299 million euros in the July-to-September quarter from 551 million a year earlier.
The company’s biggest unit by revenue — the mobile networks business — declined 24 per cent to 2.16 billion euros, driven mainly by weakness in the North American market. Operating profit for the division fell 64 per cent.
“We continue to believe in the mid- to long-term attractiveness of our markets,” Nokia CEO Pekka Lundmark said in a statement. “Cloud computing and AI revolutions will not materialize without significant investments in networks that have vastly improved capabilities.”
The market weakness comes as telecom operators, Nokia's main clients, put investments on hold because of higher interest rates and financial costs. Higher rates — enacted by central banks worldwide — combat inflation by making it more expensive for businesses to invest in equipment and more.
The issue is marketwide, Lundmark stressed, adding that Nokia's competitors are facing a similar problem.
The world's other main suppliers of 5G broadband technology are Sweden’s Ericsson, China’s Huawei and South Korea’s Samsung. Ericsson said earlier this year that it was cutting 8 per cent of its global workforce as it looked to reduce costs.
Rather than buying new, operators are using their existing stocks of network equipment like base stations that they hoarded due to a lack of components a few years ago, Lundmark said.
“Investments by operators have reduced remarkably,” Lundmark told reporters during a media briefing. “Perhaps the most serious situation prevails at the North American market, which has a very critical effect to our total profitability.”
Nokia's sales in North America nosedived 45 per cent, to 1.3 billion in the third quarter, from a year earlier.
Even in India, a market that has seen substantial revenue growth in the past few years, the pace of 5G network rollouts — a main growth driver — has started to slow, Nokia said.
“Cost-cutting is necessary so that we can secure our competitiveness and thus our future,” Lundmark said
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