Nokia revealed plans to cut around 14,000 jobs as part of a major cost-cutting strategy. This move is a key component of their broader restructuring initiative, aiming to slim down their workforce from the current 86,000 employees to a target range of 72,000 to 77,000.
Nokia’s decision to reduce its workforce comes in response to a challenging financial landscape. The company’s third-quarter earnings took a substantial hit, prompting this cost-cutting response. In the face of this adversity, Nokia is looking to reduce its overall costs and make its operations more efficient.
Nokia Q3 Results 2023
Their cost-cutting plan sets out to achieve a gross cost reduction ranging from 800 million euros ($842.5 billion) to 1.2 billion euros by the end of 2026, says CNBC. This decision to cut jobs directly results from Nokia’s struggling financial performance. In the third quarter, their net sales plummeted by 20% compared to the previous year, with profits taking a nosedive of 69% year-on-year, landing at 133 million euros. You can look at this link for a detailed look at Nokia’s 2023 Q3 results.
Parallels with Ericsson
Nokia’s reduction of its workforce mirrors similar actions taken by its competitor, Ericsson. Ericsson announced earlier its intention to trim its employee roster by 8,500 as part of a larger cost-cutting initiative. These tough times are not unique to Nokia; the entire telecommunications industry is grappling with a global economic slowdown and a decline in infrastructure spending by mobile operators.
One noteworthy impact of this financial challenge is Nokia’s mobile networks business, their largest revenue unit, which saw a substantial decrease of 24% in year-on-year sales, landing at 2.16 billion euros. Operating profits for this division also took a severe hit, plummeting by 64% year-on-year. The primary driver behind this decline was the slowdown in North America. Nokia also reported a drop in sales volume in India, attributed to the stabilization of 5G deployments.
Nokia’s CEO, Pekka Lundmark, attributed the drop in mobile network revenue to the deceleration of 5G deployment in India, which was no longer sufficient to counterbalance the North American decline. Despite these challenges, Lundmark remains optimistic about Nokia’s future and has upheld their full-year net sales forecast, expecting figures between 23.2 billion euros and 24.6 billion euros.
“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,” Lundmark said.
