Nokia To Axe 14,000 Jobs As US Demand Declines
Heavy job losses at Finnish telecoms supplier Nokia, amid weak demand for 5G equipment in US and elsewhere
Finnish telecoms giant Nokia is to axe up to 16 percent of its workforce, but will seek to protect its research and development teams.
The decision to axe up to 14,000 jobs over the next three years in order to cut costs comes after Nokia posted a 70 percent drop in third-quarter profits, which fell to €133m (£116m) compared with €428m (£372m) a year earlier.
Third quarter sales also fell 20 percent to €4.982bn (£4.3bn) from €6.241bn (£5.4bn) in the same year-ago period, reflecting a worse-than-expected slump in demand for its mobile network equipment.
Job losses
Espoo, Finland-based Nokia is seeking to cut 16 percent of its 86,000-strong global workforce, and bring it down to a total workforce of between 72 000 and 77 000 people.
It is part of Nokia’s efforts to cut costs by €800m, and €1.2bn by the end of 2026.
“The market situation is really challenging and it is witnessed by the fact that in our most important market, which is the North American market, our net sales are down 40% in Q3,” Chief Executive Pekka Lundmark told Reuters in an interview.
Lundmark declined to give more details as to where the job cuts will fall the heaviest, saying the company must consult first with employee representatives.
However, he said he wanted to protect research and development.
Nokia reportedly expects at least 400 million euros of savings in 2024, and a further 300 million euros in 2025.
“We continue to believe in the mid-to-long-term market, but we are not going to sit and wait and pray that the market will recover anytime soon,” Lundmark reportedly said. “We simply don’t know when it will recover.”
Ericsson losses
Across the water at Ericsson, the Swedish telecoms giant announced earlier this year that it would cut 8,500 jobs around the world in a bid to slash costs, with 1,400 jobs set to go in Sweden itself.
Ericsson had been dealing with hefty financial penalties over bribery allegations over the past few years.
In December 2019 the US DoJ confirmed Ericsson had agreed to pay more than $1 billion to settle a probe into alleged corruption including bribing public officials in a number of countries.
Then in March this year Ericsson agreed to pay a $207 million penalty after another SEC investigation, and pleaded guilty to violating the anti-bribery provisions of the Foreign Corrupt Practices Act.
According to Reuters, Ericsson said on Tuesday the uncertainty affecting its business would persist into 2024.
