Nokia to cut 10000 jobs
Nokia said on Thursday it planned to do away with 10,000 jobs by the end of next year, amid massive additional cost-saving measures.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure long-term competitive strength," Nokia CEO Stephen Elop said.
Following the news, the Finnish cellphone manufacturer, which only recently lost the world number one maker ranking it had held for 14 years, saw its shares plunge by more than 11% on the Helsinki stock exchange.
The company, which has been undergoing a major restructuring for more than a year, said it would implement an additional à1.6-billion (R16.8-billion) in cost reductions by the end of next year, especially affecting its beleaguered Devices and Services unit. Nokia said it would close facilities in Ulm, Germany, Burnaby, Canada, and its manufacturing plant in Salo, Finland, although its Salo research and development operations would continue.
Analysts were caught off guard by the announcement that 10000 jobs would be lost.
"We knew something would happen but this was well beyond our expectations," Nordea Bank analyst Sami Sarkamies said, adding that Nokia was in line to become a prime takeover target.
Nokia also announced a massive management reshuffle yesterday.
"We must reshape our operating model and ensure that we create a structure that can support our competitive ambitions," Elop said.
The move came as Nokia continued to suffer major market share losses in the all-important smartphone market.
Nokia has, since early last year, been restructuring and phasing out its Symbian smartphones in favour of a partnership with Microsoft.
That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RIM's BlackBerry, Apple's iPhone and handsets running Google's Android platform, among others.
"We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services," Elop said.
Nokia acknowledged that competition in the second quarter was hitting its smartphone business harder than expected and warned the operating loss in its main mobile devices unit would be bigger than previously anticipated.
As part of its strategy to focus more heavily on its Lumia line and new technologies, Nokia also announced "the planned acquisition of assets from Sweden-based Scalado, which has imaging technology on more than one billion devices".