Nokia announced steep layoffs along with weak third quarter resultsPhoto: LEHTIKUVA (Reuters)
Nokia announced layoffs of up to 14,000 employees and “expects to act quickly” on the cost-cutting measures to “address the market environment.”
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The Finnish mobile company expects to save $423 million (€400 million) which reduces staffing expenses by 10% to 15%, Nokia said in the statement.
“Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” CEO Pekka Lundmark said in the statement.
The news comes as Nokia reported a weak third quarter results which saw a 15% dip in sales compared to the year before, citing “macroeconomic uncertainty and higher interest rates” as factors impacting the business.
Sales were down in all regions except India, the Middle East, and Africa. The biggest drops this quarter were in North America, falling 40%, and Greater China, falling 24%, compared to the year before.
Slow 5G rollout impends on earnings
Mobile networks sales fell 19% in the third quarter compared to a year ago due to the slowed pace of 5G rollout in India.
Nokia had banked on the potential 5G deployment in India to help “offset” the faltered North America rollout after the network operators over-ordered gear in 2021 and 2022 to meet lockdown-era surge in internet traffic.
Swedish mobile rival Ericsson also warned that sales in the second half of 2023 would likely come in lower than usual, echoing Nokia’s remarks of a “challenging environment and macroeconomic uncertainty.”
Due to poorer-than-expected performance, Nokia will be “tracking towards the lower end” of its sales forecast in the range of $24.6 billion (€23.2 billion) to $26 billion (€24.6 billion) for the full year.
Still, Lundmark said the next quarter will see more “normal seasonal improvement” in its network business.
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