Nokia says it will cut up to 14,000 jobs

By Victor MUJIDU

As a result of a drop in profit performance in third-quarter earnings, the Finnish telecommunication gear group Nokia (NOKIA.HE) announced a reduction of its jobs as part of a cost-cutting plan.

Nokia targets to lower its cost base on a gross basis from 2023 by between 800 million euros ($842.5 billion) and 1.2 billion euros by the end of 2026.

Announcing on Thursday 19, Nokia said it will reduce its cost base and increase operation efficiency to “address the challenging market environment.”

The Finnish telecom move will see a reduction of the number of employees currently from 86,000 to between 72,000 and 77,000.

The substantial layoffs come after Nokia reported third-quarter net sales declined 20 per cent year-on-year to 4.98 billion euros. Profit over the period plunged by 69 per cent year-on-year to 133 million euros.

The sharp fall in profit record is a result of the slow uptake of its customers due to the stiff competition in the global economy caused by the production of more mobile brands.

Nokia and rival Ericsson (ERICb.ST) have grappled with slowing demand for 5G equipment in countries such as the United States, trying to offset some of the weakness with higher sales to India, a low-margin market.
Ericsson, which has also laid off thousands of employees this year, said on Tuesday the uncertainty affecting its business would persist into 2024.

“While our third-quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter,” said Chief Executive Pekka Lundmark in a statement.

While acknowledging the challenges faced during the third quarter, Chief Executive Pekka Lundmark expressed optimism about a more typical seasonal improvement in the network businesses during the fourth quarter. Nokia plans to restructure its corporate center to provide strategic oversight and guidance, safeguard research and development spending, and grant more autonomy to its business units.

“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” Lundmark said.