Nokia warns for poor results, plans 10,000 job cuts

Nieuws Mobiel Wereld 14 JUN 2012
Nokia warns for poor results, plans 10,000 job cuts
Nokia has outlined plans to cut another 10,000 jobs by the end of next year, as it continues to suffer from tough competition. The company said its smartphones business is doing worse than expected in the second quarter, and competitive pressure on the entire handset business is expected to continue into Q3. As a result, its adjusted operating loss is expected to be bigger than previously forecast at the main Devices & Services division in Q2. Nokia earlier forecast an operating margin similar to or below the negative 3.0 percent reported in Q1.

The job cuts will come from shutting down R&D facilities in Ulm, Germany and Burnaby, Canada; ending manufacturing in Salo, Finland; refocusing marketing and sales to prioritize key markets; streamlining IT, corporate and support functions; and selling non-core assets. Nokia confirmed plans to sell its luxury phone unit Vertu to private equity group EQT.

The company now targets annual operating costs at Devices & Services of EUR 3.0 billion by the end of 2013, down from EUR 5.35 billion in 2010. The restructuring will lead to another EUR 1.0 billion in one-time charges over the next year. Nokia said the changes are aimed at returning the handset business to "sustainable profitability as soon as possible".

To improve its product portfolio, Nokia plans to expand the Lumia range to more price points and formats and invest more in location-based services to differentiate its offering. LBS will also target other industries, to add new revenue sources. In feature phones, Nokia said it will further develop its Series 40 and Series 30 devices, and invest in key features such as the Nokia Browser. Nokia also announced the planned acquisition of assets from Sweden-based Scalado, which develops imaging technology.

Finally, Nokia announced a number of changes to its senior leadership. Juha Putkiranta was appointed executive VP of Operations, Timo Toikkanen as executive VP of Mobile Phones, Chris Weber as executive VP of Sales and Marketing, Tuula Rytila as senior VP of Marketing and Chief Marketing Officer, and Susan Sheehan as senior VP of Communications. Putkiranta, Toikkanen and Weber will join the Nokia Leadership Team from July. Jerri DeVard is stepping down as chief marketing officer; Mary McDowell steps down as executive VP of Mobile Phones; and Niklas Savander steps down as executive VP of Markets. All three will leave Nokia after a transition period. 

Categories:

Mobiel

Companies:

Nokia,  Vertu,  Scalado

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Wereld

Tags:

Location Based Services, Finance, Handsets, Corporate strategy, M&A buyouts & divestments

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