Nokia announces 14,000 job cuts amid 20% sales decline
Nokia will slash up to 14,000 jobs after experiencing a 20% dip in third-quarter sales. The company is struggling with a reduced demand for 5G equipment, especially in the US. Nokia's goal is to save between €800 million and €1.2 billion by 2026. This will leave them with a workforce of 72,000-77,000 employees, down from the current 86,000. The firm is aiming for at least €400 million in savings by 2024 and an extra €300 million by 2025.
Competitors face similar challenges
Ericsson, Nokia's rival, is also feeling the pinch with a slowdown in demand for 5G equipment and has let go of thousands of employees this year. Ericsson recently revealed that the uncertainty impacting its business would continue into 2024. Both companies are trying to counterbalance the drop in sales by targeting higher sales in India, a low-margin market.
Nokia's restructuring plan
To reach its cost-saving targets, Nokia plans to adopt a leaner corporate structure that will boost strategic focus while keeping research and development spending intact. The company also aims to give more operational autonomy to its business units. Nokia CEO Pekka Lundmark said that "resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness."
Expectations for the future
Despite the hurdles Nokia and its competitors face, Lundmark remains hopeful about the future. He anticipates a more typical seasonal uptick in network businesses during this year's fourth quarter. To note, Nokia's third-quarter net sales plunged 20% YoY to €4.98 billion. Profit over the period plunged 69% YoY to €133 million. Revenue from its mobile networks business, declined 24% YoY to €2.16 billion, with its operating profit falling 64% YoY.
