Nokia announces plans to cut 10,000 jobs by end of 2013
Once a dominant force in smartphones, struggling Nokia will ax 10,000 jobs by the end of 2013 in an effort to cut costs and turn the company around.
The company announced on Thursday in a press release that it will reduce as many as 10,000 positions globally by the end of 2013. The company has already begun discussions with employee representatives in anticipation of these layoffs and in accordance with local legal requirements.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Nokia Chief Executive Stephen Elop said. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."
The company also plans to shutter research and development facilities in Burnaby, Canada and Ulm, Germany, along with a manufacturing plant in Salo, Finland. Going forward, Nokia plans to prioritize key markets, and to streamline its IT, corporate and support functions.
The Finnish handset maker also provided investors with an updated outlook for its results from the current quarter. The company said that its "Smart Devices" division has been negatively affected "to a somewhat greater extent than previously expected."
Looking forward to the next quarter, Nokia said it does not expect the situation to improve. Its margins for the second quarter of 2012 are now projected to be below its previous prediction of negative 3 percent.
"We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia," Elop said. "We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions."
Last quarter, Nokia's Symbian platform, which it is transitioning away from, dropped 60 percent of its shipments from a year prior. That placed Symbian in third place, behind Google Android and Apple's iOS.
In abandoning Symbian, Nokia has switched to Microsoft's Windows Phone platform, which powers its new flagship Lumia 900. But while Symbian's year-over-year shipments collapsed, Windows Phone shipments only grew 26.9 percent year over year, and its share over the overall market actually fell from 2.6 percent in the first quarter of 2011 to 2.2 percent a year later.
Though Nokia lost $1.7 billion selling mobile device last quarter, it earned $600 million from Apple in a patent licensing dispute resolution. That means Nokia made more from Apple's iPhone last quarter than it did from its own Lumia handset running Windows Phone 7.
The company announced on Thursday in a press release that it will reduce as many as 10,000 positions globally by the end of 2013. The company has already begun discussions with employee representatives in anticipation of these layoffs and in accordance with local legal requirements.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Nokia Chief Executive Stephen Elop said. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."
The company also plans to shutter research and development facilities in Burnaby, Canada and Ulm, Germany, along with a manufacturing plant in Salo, Finland. Going forward, Nokia plans to prioritize key markets, and to streamline its IT, corporate and support functions.
The Finnish handset maker also provided investors with an updated outlook for its results from the current quarter. The company said that its "Smart Devices" division has been negatively affected "to a somewhat greater extent than previously expected."
Looking forward to the next quarter, Nokia said it does not expect the situation to improve. Its margins for the second quarter of 2012 are now projected to be below its previous prediction of negative 3 percent.
"We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia," Elop said. "We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions."
Last quarter, Nokia's Symbian platform, which it is transitioning away from, dropped 60 percent of its shipments from a year prior. That placed Symbian in third place, behind Google Android and Apple's iOS.
In abandoning Symbian, Nokia has switched to Microsoft's Windows Phone platform, which powers its new flagship Lumia 900. But while Symbian's year-over-year shipments collapsed, Windows Phone shipments only grew 26.9 percent year over year, and its share over the overall market actually fell from 2.6 percent in the first quarter of 2011 to 2.2 percent a year later.
Though Nokia lost $1.7 billion selling mobile device last quarter, it earned $600 million from Apple in a patent licensing dispute resolution. That means Nokia made more from Apple's iPhone last quarter than it did from its own Lumia handset running Windows Phone 7.
Comments
I heard this reported this morning, with the comment that they are making these cuts in an effort to be more competitive, or something to that effect. All I thought was, "shouldn't you just try to make products that customers want to buy?" They are doing exactly what RIM is, which sounds good for the short-term attention deficit disorder financial analysts, but it's not addressing the underlying problem with having products a consumer wants to buy.
Of course they don't want to talk about that. And what gives with their closing R&D facilities? Isn't that again what should be driving them forward? That makes me believe they had nothing new or good coming out of either facility. Again, not a good sign at all for Nokia. My guess is they'll keep cutting while sales keep sliding until they have nothing left to cut - while trying to extract maximum licensing fees for their existing tech.
I'm sure when Nokia goes under, these executives who sold the company out will be given nice positions at Microsoft for all their hard work.
I called this long ago. Nokia has long been dead. Never in the history of the world has a Fortune 500 company been run into the ground so fast. Elop/Microsoft did them good. Bet the company on a failed mobile platform from a third party. Yeah, that makes sense.
NOK reached a 52-week low and short sales are suspended...
It amazes me how these cell phone companies enter into a death spiral.
I wonder how much of Microsoft's success in the cell phone market depends on Nokia -- a lot, I bet!
Maybe the future lies in smart and semi-smart phones... later this year, Apple will have 1 or 2 older models of iPhones that appear to be in the feature phone price range....
At least with there Microsoft deal they got a cash injection to keep them alive while they trim there business down from being a market leader complete with costs associated with a market leader, to a company that can grow.
Reshaping the company to be as attractive as possible for a buyout?
I will give them more credit for recently making a decent product (Lumia 900) than RIM.
True. Had I been asked to bet, I would have wagered that RIM would have gone under first. RIM's products are junk (spoken by a former BB user).
In reply to BullHead:
Really, you called it long ago? So, you have something to show for it, right? You shorted the stock, because you knew this day would come, right?
Quote:
Originally Posted by OriginalG
Reshaping the company to be as attractive as possible for a buyout?
Who would buy them... or RIMM... or MMI (oh wait).
Seriously, I can see Apple or someone buying the NOK IP... but there doesn't seem to be any value elsewhere.
Unless some China corporation buys NOK ... Nah! That makes no sense at all!
So, by 2013-2014 there, likely, will be 2 major players in the cell phone business: Apple and Sammy -- I believe that the feature phones' days are numbered... though the death rattle may take several years.
They had 122,000 employees last count prior to the layoff
Beyond that, at least they tried to make it on their own instead of copying others' work.
Interesting that Samsung came from nowhere to the leader in just a couple of years and their phones just happen to look very much like Apple's.......
Quote:
Originally Posted by kustardking
In reply to BullHead:
Really, you called it long ago? So, you have something to show for it, right? You shorted the stock, because you knew this day would come, right?
I made this post on 2-4-2011: http://forums.appleinsider.com/t/118530/microsoft-paying-nokia-billions-to-adopt-windows-phone-platform#post_1807287
Yeah, i would say i called it. Unfortunately i do not have money to play the stock market.
Quote:
Originally Posted by jragosta
Interesting that Samsung came from nowhere to the leader in just a couple of years and their phones just happen to look very much like Apple's.......
So, Apple decided to copy the right set of products?
(Sorry, someone's going to post it - might as well be someone who doesn't mean it.) ;-)
At this point, news about NOK and RIMM evokes no emotions other than pity.
Quote:
Originally Posted by boredumb
So, Apple decided to copy the right set of products?
(Sorry, someone's going to post it - might as well be someone who doesn't mean it.) ;-)
Yes, I know you're joking, but...
Apple didn't copy anything really. A lot of people like to make a stink about the LG Prada, but obviously Apple didn't run to the drawing boards and redesign the iPhone in just a few months. Like Steve said, they had been working on the iPhone for over two years prior to its unveiling, which would date it back to 2004 sometime. No one could argue that a full screen device with multi-touch was on anyone's radar then. Just the fact that they went with multi-touch means the display size had to be relatively large to accommodate several touches at once for making different gestures.
It's safe to say Apple gambled big time and came out the clear winner. And while Samsung may or may not sell more "smartphones" than Apple and Android may have a larger share of the market, Apple's iOS platform is heads and shoulders above anything on the market right now. It is the largest and most vibrant mobile platform today with a thriving ecosystem that drives several multi-billion dollar markets. It's safe to say iOS will be around a long time.
Another AI article spreading misinformation. Nokia's entire business units lost US1.7 billion, not their handset division. The majority was with their "Location & Commerce" division, and the rest with NSN
Quote:
Originally Posted by mstone
They had 122,000 employees last count prior to the layoff
I know we're talking people's jobs here -- but a less than 10% cut spread over 18 months is rather a timid reduction... and well below NOK's losses in revenue, market share, profits, etc.
Especially when you consider that the remaining 112,000 employee's jobs's will be at risk without more drastic action.
It seems like this is just a "hair cut" -- when major surgery is required for survival of the patient.
Beleaguered is the word they should use.