The new Nokia logo will be displayed on the mobile phone, with the Nokia logo on the screen.
Photo only | Photo only | Getty Images
Nokia announced Thursday it would cut up to 14,000 jobs as part of a cost-cutting plan after third-quarter profits slumped.
The Finnish telecommunications giant said it would reduce its cost base and increase operational efficiency to “address the challenging market environment.”
The company aims to reduce its gross cost base by 800 million euros ($842.5 billion) from 2023 to 1.2 billion euros by the end of 2026.
This will reduce the number of employees from the current 86,000 to 72,000 to 77,000.
The significant layoffs come after Nokia reported a 20% year-on-year net sales decline to 4.98 billion euros in the third quarter. Profit fell by 69% to 133 million euros in the reporting period compared to the previous year.
At the beginning of the year, Nokia’s rival Ericsson announced plans to lay off 8,500 employees, also as part of a cost-cutting plan.
Nokia, one of the world’s largest telecommunications equipment makers, faces headwinds from a slowing global economy and cuts in infrastructure spending by mobile operators.
Sales at Nokia’s top-selling division, its mobile network business, fell 24% year-on-year to 2.16 billion euros, with the division’s operating profit plunging 64% year-on-year.
Nokia said this was primarily due to declines in North America. The company also described sales volumes in the key market of India as “moderate” as 5G deployment “normalizes.” 5G is the next generation mobile internet that promises faster speeds and Nokia is involved in introducing this technology in India.
Cost-cutting measures have also been taken in the US this year, particularly at network operators such as Verizon and AT&T.
Jim Cramer’s Investing Club explains what investors should look for when a company announces earnings
Nokia CEO Pekka Lundmark said in a statement on Thursday that the decline in mobile network revenue was due to “some moderation in the pace of 5G deployment in India, which meant that growth there was no longer sufficient to meet the demand.” Compensating for the slowdown in North America.”
For the year as a whole, the company continues to expect net sales in a range between 23.2 and 24.6 billion euros and is therefore sticking to its forecast.
“I remain confident that the fundamental drivers of our business are critical,” Lundmark said.
“Data traffic growth continues, 5G deployment is still only about 25% complete (excluding China), and network investment continues. Cloud computing and AI revolutions will not happen without significant investment in networks with vastly improved capabilities.”
Nokia’s numbers come after Swedish manufacturer Ericsson reported third-quarter results on Wednesday that showed a decline in sales and similar problems in North America.
Ericsson CEO Borje Ekholm warned in a statement on Wednesday that the “fundamental uncertainty impacting the company’s mobile business” would continue into 2024, casting doubt on a recovery for telecom equipment makers.