The poor results force Nokia to take action. The Finnish company will cut up to 14,000 jobs, 16% of the current workforce, after registering a 20% drop in revenue in the third quarter, as announced this Thursday when presenting results.
Worse results than expected justify the decision. In the third quarter, sales decreased by 20%, to 4,980 million, and profit fell 69%, to 133 million. Until September, the outlook is similar: net profit was reduced by 36%, to 711 million euros, and sales totaled 16,551 million, 5.2% less. The infrastructure business, the cloud, services, mobile networks… suffers.
The company blames the slowdown in sales of new generation 5G equipment, especially among operators in the US and the European Union, which has led to trying to compensate for this weakness with more sales in markets where the margin is lower. , like the Indian. Despite the strength of the cloud or AI, these revolutions will not materialize if there are no investments in networks. “While the timing of market recovery is uncertain, we are not standing still but taking decisive action at three levels: strategic, operational and cost,” said Nokia President and CEO Pekka Lundmark.
With the sick leave plan, it aims to save 800 to 1,200 million euros annually by 2026, which means reducing personnel spending by up to 15%. Already in 2024 it aims to reach 400 million savings. The workforce will slim down from the current 86,000 workers to one with 72,000-77,000 employees. It will also move to a smaller headquarters to refocus its strategy, while maintaining R&D spending. Cost savings will be achieved primarily in mobile networks, network and cloud services, as well as corporate functions, it is explained.
One of its big rivals, Ericsson, has also laid off thousands of employees this year and this week acknowledged that it expects the uncertainty affecting its business to persist until 2024.
