Nokia Announces Massive Job Cuts as Earnings Plunge
Finland’s telecommunications giant, Nokia, has revealed plans to cut up to 14,000 jobs as part of its cost-cutting strategy following a significant decline in third-quarter earnings. The company aims to reduce its cost base and improve operational efficiency to address the challenging market environment it currently faces.
Nokia reported a 20% year-on-year decrease in net sales for the third quarter, amounting to €4.98 billion. Furthermore, its profit during this period plummeted by 69% to €133 million. These disappointing earnings have prompted the company to take bold measures to restore its financial health.
In an effort to lower its cost base, Nokia is targeting a reduction of between €800 million and €1.2 billion by the end of 2026. As a consequence, the number of employees is expected to decrease from 86,000 to a range of 72,000 to 77,000.
Nokia’s struggles come at a time when the global economy is slowing down, and mobile operators are reducing infrastructure spending. The company’s largest revenue-generating unit, the mobile networks business, experienced a 24% decline in sales to €2.16 billion, with operating profit plunging by 64% year-on-year. The North American market accounted for a significant portion of these declines, while sales volumes in India were also described as “moderated” due to the normalization of 5G deployments.
Nokia’s main rival, Ericsson, has also implemented cost-cutting measures, including the layoff of 8,500 employees, to counter similar challenges in the market.
Despite the difficult circumstances, Nokia CEO Pekka Lundmark remains optimistic about the company’s future. Lundmark stated that he is confident in the fundamental drivers of the business, such as the growth in data traffic, the ongoing 5G rollout, and the increasing investment in networks to support cloud computing and AI advancements.
Nokia still maintains its full-year net sales forecast, expecting results in the range of €23.2 billion to €24.6 billion.
The decline in Nokia’s earnings and the challenges faced by telecommunications equipment makers were mirrored in the recent third-quarter results of Ericsson. CEO Borje Ekholm warned that the uncertainties impacting the mobile networks business will persist until 2024, casting doubts on the industry’s recovery.
With the telecom equipment sector navigating a difficult market landscape, it remains to be seen how both Nokia and Ericsson will adapt and transform their operations to remain competitive in the long term.