Nokia has announced a significant cost-cutting initiative that involves cutting as many as 14,000 jobs, in response to what it describes as a “weaker” market environment.
The Finnish telecom company, a major provider of 5G equipment employing 86,000 people, revealed this move as part of a broader restructuring effort that aims to reduce its workforce to a range between 72,000 and 77,000 employees.
This decision will enable the company to reduce staffing expenses by 10% to 15% and is expected to result in savings of at least €400 million ($421.4 million) in 2024 alone.
Overall, Nokia anticipates that these staff reductions will cut the company’s costs by up to €1.2 billion (nearly $1.3 billion) cumulatively by the end of 2026.
Nokia (NOK) emphasized its commitment to acting swiftly in implementing these changes.
Nokia CEO Pekka Lundmark acknowledged the difficulty of these decisions, stating, “the most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia, and we will support everyone that is affected by this process.”
The announcement coincided with Nokia reporting results that were worse than expected.
The company disclosed a 15% decline in sales for the third quarter compared to the same period in the previous year, attributing this drop to “macroeconomic uncertainty and higher interest rates continuing to pressure operator spending.”
The mobile network sales for the third quarter also fell by 19% compared to the previous year due to a slowdown in the pace of 5G deployment in markets like India.
Notably, Nokia’s Swedish rival, Ericsson, also issued a warning about lower sales in the second half of 2023, echoing Nokia’s concerns about a “challenging environment and macroeconomic uncertainty.”
However, Nokia has maintained its 2023 outlook, anticipating sales between €23.2 billion and €24.6 billion ($24.4 billion and $25.9 billion) for the full year.
CEO Pekka Lundmark expressed the company’s continued belief in the long-term attractiveness of its markets.
Source-CNN
