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Nokia will lay off up to 14,000 workers as revenues drop

Nokia will lay off up to 14,000 workers as revenues drop

Nokia, the Finnish telecommunications company, has revealed intentions to lose up to 14,000 jobs over the next three years in order to save costs following a lower-than-expected drop in demand for its mobile network equipment. The corporation intends to cut its personnel from 86,000 to about 72,000. The layoffs were announced as the business reported a 70% decline in third-quarter earnings to €133 million (£116 million) from €428 million the previous year.

Reasons for the job cuts

The job cuts are part of efforts to cut costs by €1.2bn by the end of 2026. Nokia said that demand across the wider mobile networks market was likely to drop 9% overall this year. That is compared with previous expectations for a 2% decline. The company said the exact scale of the cost-cutting program would depend on demand for its products. Nokia anticipates taking swift action to achieve savings of up to €400 million in the following year, and an additional €300 million by 2025.

Impact of Workforce Reduction

Among the most challenging business choices, those that affect individuals are often the most sensitive. Nokia’s CEO, Pekka Lundmark, conveyed, “We have a workforce of immensely talented individuals at Nokia, and we are committed to providing support to all those who will be affected by this process. Resetting our cost structure is an essential measure to adapt to market uncertainties and secure our long-term profitability and competitiveness. We maintain confidence in the opportunities that lie ahead for us.”

Nokia did not detail where the job cuts would fall. Nokia currently has a workforce of approximately 37,700 individuals in Europe, which encompasses the United Kingdom, with offices in Bristol, Cambridge, and Reading. The impending job cuts are also expected to have an impact on Nokia’s operations in the United States, where the company employs around 10,500 staff members in various offices, including locations in Chicago and Dallas.

Nokia has pioneered several inventions that have paved the way for digital potential all around us. These include the transistor, the first satellite, and more recently, breakthroughs in microchips, massive MIMO and optical communications.

Nokia’s renowned industrial research arm, Nokia Bell Labs, has won multiple Nobel Prizes and is a global leader in disruptive research on networks, software, artificial intelligence (AI), automation and the Internet of Things (IoT).

How has Nokia changed over time?

Nokia has undergone several transformations over the years. It was founded in 1865 as a single paper mill operation. In 1967, the Nokia Corporation was formed.

For the past three decades, Nokia has focused on transforming telecommunications. From the first GSM call and the invention of the text message to creating the first 3G network, Nokia’s game-changing innovations have connected the world.

Nokia has pioneered several inventions that have paved the way for digital potential all around us. These include the transistor, the first satellite, and more recently, breakthroughs in microchips, massive MIMO and optical communications.

Nokia’s renowned industrial research arm, Nokia Bell Labs, has won multiple Nobel Prizes and is a global leader in disruptive research on networks, software, artificial intelligence (AI), automation and the Internet of Things (IoT).

The landscape of mobile network equipment has experienced shifts over time. The global telecommunications infrastructure and equipment market has displayed a consistent growth trajectory. Statista’s data indicates that in 2018, the global telecom equipment market was projected to reach an impressive $351 billion.

However, within this broader telecommunications equipment market, the segment dedicated to mobile network equipment has demonstrated a degree of volatility. According to initial insights from Dell’Oro Group, the aggregate telecom equipment market witnessed a reduction in revenue growth, moving from an 8% increase in 2021 to a more modest 3% year-on-year growth in 2022.

It’s crucial to acknowledge that the telecommunications industry operates within a highly competitive and ever-evolving environment. The industry’s dynamism is evidenced by the rise and fall of various mobile phone manufacturers over the years, showcasing the need for adaptability and innovation.

  • How will the workforce reduction impact Nokia’s global operations? The specifics of where the job cuts will be concentrated have not been disclosed by Nokia. Presently, Nokia employs approximately 37,700 individuals in Europe, which includes the UK with offices in Bristol, Cambridge, and Reading. The impact of these job cuts is also anticipated in the United States, where Nokia maintains a workforce of around 10,500 employees in locations such as Chicago and Dallas.
  • What prompted Nokia’s decision to downsize its workforce? Nokia’s motivation for reducing its workforce is part of a broader cost-cutting initiative aimed at achieving €1.2 billion in savings by the end of 2026. Additionally, Nokia cited a substantial anticipated decline in demand across the mobile networks market, now projected to be approximately 9% for the year, a significant shift from the previous expectation of a 2% decline.
  • Are there identifiable regions or departments within Nokia that will bear a greater brunt of these job cuts? Nokia has not provided detailed information on the specific areas or departments that will be most affected by the forthcoming job cuts.
  • What is the timeframe for the implementation of these job cuts? Nokia is targeting savings of between 800 million euros ($842 million) and 1.2 billion euros by 2026, its deadline to deliver a long-term comparable operating margin plan of at least 14%. The company expects to reduce its employee base to between 72,000 and 77,000 employees, from 86,000, or about 16% job cuts at the high end.
  • How will these job cuts affect Nokia’s long-term business strategy and goals? The company aims to reduce its workforce from 86,000 to about 72,000. Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness.
  • Are there any specific reasons or challenges that led to this decision in the telecommunications industry? The job cuts were announced as the company revealed a 70% drop in third-quarter profits, which fell to €133m (£116m) compared with €428m a year earlier.
  • What measures is Nokia taking to ensure the company’s stability and competitiveness amid these job cuts? The company aims to reduce its workforce from 86,000 to about 72,000. Realigning our cost structure is a crucial measure to adapt to market volatility and ensure our sustained profitability and competitive strength in the long run.
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