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Struggling Nokia announces 10,000 job cuts

Posted: 15 Jun 2012     Print Version  Bookmark and Share

Keywords:job cuts  cost-saving  manufacturing  mobile phones 

Struggling handset manufacturer Nokia has announced its plans to cut 10,000 jobs globally and shut down some of its manufacturing facilities. The job cuts are planned to be complete by the end of 2013.

Under the cost-saving measures, the company also plans to shut down its only manufacturing plant in its homeland Finland, along with two R&D centres in Germany and Canada. However, the company plans to keep its research and development centre in Finland open.

Out of 10,000 planned job cuts, 3,700 will take place in Finland.

Nokia said the job reductions and closure of three units would help the company save approximately Rs.11,034.48 crore (EUR 1.6 billion) by 2013 end.

"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," added Elop. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities," said Nokia's President and CEO Stephen Elop.

As part of these planned changes, Nokia said it will "closely assess the future of certain non-core assets." In line with this, the company plans to divest its luxury mobile phones business Vertu to EQT VI, a European private equity firm.

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Taking into account these planned measures the company now targets to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately Rs.20,689.66 crore (EUR 3 billion) by the end of 2013.

This is an update to Nokia's target to reduce Devices & Services non-IFRS operating expenses by more than Rs.6,896.55 crore (EUR 1 billion) for the full year 2013, compared to the full year 2010 Devices & Services non-IFRS operating expenses of Rs.36,896.55 crore (EUR 5.35 billion), the company said.

In order to improve its operating model and achieve profitability, Nokia said it will invest strongly in products and experiences that make Lumia smartphones stand out and in location-based services.

In line with this strategy, the company has announced the acquisition of Swedish firm Scalado, a maker of smartphone imaging technology.

Nokia aims to further develop its Series 40 and Series 30 devices, and invest in key feature phone technologies like the Nokia Browser, aiming to be the world's most data efficient mobile browser.

In addition, the company also announced changes in its management team. Mary McDowell, the executive vice president of handset business; chief marketing officer Jerri DeVard; and Niklas Savander, the executive vice president of markets will be leaving the company, effective June 30, 2012.

Morever, the company appointed Juha Putkiranta as executive vice president of operations; Timo Toikkanen as executive vice president of mobile phones; Chris Weber as executive vice president of sales and marketing; Tuula Rytila as senior vice president of marketing and chief marketing officer; and Susan Sheehan as senior vice president of communications.

"With these planned actions, we believe our Devices and Services business has a clear path to profitability. Nokia intends to maintain its strong financial position while proceeding aggressively with actions aimed at creating shareholder value," said Timo Ihamuotila, executive vice president and CFO of the company.

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