Nokia declared that it would let go of up to 14,000 personnel as part of a cost-saving program following third quarter financial results that tumbled. The Finnish telecommunications behemoth stated that it will lessen its expenses and boost operational efficacy to "tackle the tough market situation." These drastic job cuts come after Nokia exposed a 20% year-on-year fall in third-quarter net sales to 4.98 billion euros. Profit during the period dropped by 69% year-on-year to 133 million euros.
On Thursday, Nokia announced a cost reduction plan which entails cutting up to 14,000 jobs. This is in response to a 69% year-on-year drop in third-quarter profits to 133 million euros, with total net sales decreasing by 20% to 4.98 billion euros. The Finnish telecommunications giant is aiming to reduce its cost base on a gross basis by 800 million to 1.2 billion euros by the end of 2026, and in doing so, reduce its current employees from 86,000 to between 72,000 and 77,000. This is similar to Ericsson's decision to lay off 8,500 employees earlier this year in a bid to cut costs.
Nokia, one of the world's largest telecommunications equipment makers, is battling a slowing global economy and reduced infrastructure spending by mobile operators. Revenue from its largest unit, its mobile networks business, saw a 24% year-on-year decrease to 2.16 billion euros, with operating profit for the division plummeting 64%. This is mainly due to downtrends in North America, with India's sales volumes described as "moderated" due to the normalization of 5G deployments. Cost cutting has been instigated in the U.S. this year, and Nokia CEO Pekka Lundmark pointed to the slowdown in North America and India's 5G investments as contributing factors to the drop. The company is continuing to stand by its full-year net sales supposition between 23.2 and 24.6 billion euros. Lundmark expressed his faith in the "fundamental drivers of our business," citing data traffic growth, 5G completion (excluding China) and continuous investment in networks for cloud computing and AI revolutions. Ericsson's Wednesday results revealed a similar situation in North America, and Ericsson CEO Borje Ekholm cautioned that the "underlying uncertainty impacting" its mobile networks business would likely remain in effect until 2024.
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