Nokia announces major restructuring; 10,000 jobs could be lost by 2013

Nokia announces major restructuring; 10,000 jobs could be lost by 2013
Nokia has issued a release Thursday morning, actually it was more of a dire warning. The Finnish based handset manufacturer said that to 'sharpen its strategy, improve its operating model and return the company to profitable growth' the company would cut up to 10,000 jobs and close its Salo factory by the end of 2013. The company wants to reduce its operating expenses while at the same time increasing the location based services it makes available to Nokia customers. It also plans on bringing in revenue by offering its mapping and location-based services to other industries

Nokia says it will invest in 'products and experiences' that will make Nokia handsets stand out and 'available' to more consumers. As a way to stand out and differentiate Nokia handsets from the competition, Nokia wants to offer more location-based services. And in an niche of the mobile handset market that has been getting smaller, Nokia said it wants to become more competitive and profitable in the feature phone side of the industry.

To keep the electricity on and the plants humming while going through this transition, Nokia says it needs to cut expenses and it will do so by cutting head count and closing factories. The company says it will post an operating profit in its Devices and Services group ASAP. To achieve this, Nokia has a plan. The company wants to broaden the price range of Nokia Lumia devices it offers and use Windows Phone as a way to differentiate itself from the competition. In a related development, as we have told you, Nokia improved its imaging assets by acquiring part of Sweden-based Scalado. The latter has imaging technology on more than one billion devices.Certain R&D projects will be scrapped resulting in the closing of facilities in Ulm, Germany and Burnaby, Canada; manufacturing will be consolidated leading to the planned closing of the manufacturing facility in Salo, Finland. R&D will still be done at the facility. There will be a focus on sales and marketing with certain regions getting prioritized. Non-core assets will be reduced and possibly divested. To that end, as we told you on Wednesday morning, Nokia will sell its luxury handset division, Vertu, to private equity firm EQT VI.

Nokia now has a goal of cutting 2013 operating expenses down to 3 billion EUR ($3.77 million USD), a reduction of more than 1 billion EUR. Nokia already has saved itself 70 million EUR in expenses during the first quarter of this year and expects to cut another 1.6 billion EUR from expenses by the end of next year. The company has also made some changes in management that leads to Chris Weber joining the Nokia Leadership Team beginning July 1st.

In an announcement that might get market analysts working on some new calculations, Nokia said that it will have lower operating margins in Q2 of 2012 than the -3% of Q1. In a language that only Wall Street understands, that is considered a major negative bit of news considering that the company had previously made a statement saying that operating margins for the second quarter would be similar to or lower than the -3% recorded in the first quarter. Leaving out the phrase "similar to" indicates that there is no hope that operating margins in the three months ending this month will be close to the first quarter figure.

Nokia's stock, which has dropped 40% in the last three months, bounced a bit last week on rumors of a bid for the company from Samsung. But Samsung denied that it was interested and Microsoft added that while it had taken a look at buying Nokia, it really wasn't interested at this time.

source: Nokia

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17 Comments

1. FoneAddict

Posts: 263; Member since: Jul 05, 2011

Watching Nokia is like watching a car crash in slow motion. Their stubbornness in sticking with Windows Phone as their only supported platform will be their downfall. Sad to see a once great company be driven to the ground by a Microsoft mole in Stephen Elop.

2. microsoftnokiawin

Posts: 1268; Member since: Mar 30, 2012

i know i hate stephen elop so much

5. Android2627

Posts: 28; Member since: Mar 03, 2012

That 10,000 People wont Buy a Nokia for sure!!!!

3. tarozeero

Posts: 16; Member since: Jun 07, 2012

Correct me if I'm wrong but isn't Nokia still manufacturing Symbian devices?

8. jcpwn2004

Posts: 314; Member since: Jan 18, 2012

yep, being a wp7 oem is even worse than oems that only use android. At least android has a huge marketshare, I still have only seen one person using a windows phone so far.

9. destr0y3r

Posts: 33; Member since: Jun 12, 2012

Lol at the jealousy of fandroids here crying because Nokia gave no love for your laggy OS haha

14. MartyK

Posts: 1043; Member since: Apr 11, 2012

They are crying because they hate to see a once great company go down the drain, see unlike most lovers of the other OS, we android fans loves a great competition, cause that means better things for all of us ( Andies,IOS, Windows...).thus,the more manufactures, means more great products.

4. Tsepz_GP

Posts: 1176; Member since: Apr 12, 2012

What a wreck! Elop has done quite a number on Nokia. How the mighty have fallen.

6. PhansMuneeb

Posts: 371; Member since: Jan 28, 2012

Hopefully Nokia has to come back... :)

7. darktranquillity

Posts: 285; Member since: Feb 28, 2012

Job cuts wont do the magic for you nokia. Come up with something new.

10. destr0y3r

Posts: 33; Member since: Jun 12, 2012

Lol at the jealousy of fandroids here crying because Nokia gave no love for your laggy OS haha

11. mercorp

Posts: 1045; Member since: Jan 28, 2012

Those people at n okia who lost their jobs will head to samsung or apple nect. Big mistake for nokia.

12. snowgator

Posts: 3621; Member since: Jan 19, 2011

Nothing brings me more to Earth than job losses. I still believe in WP, and can see the future as bright for Nokia. I also could see this restructuring happening no matter what. Nokia was overbloated, and that was a huge reason they contracted out Symbian support as they phased it out. Not like I know, but I am willing to bet most of these job losses are due to trimming the R&D from their software department, and the production lines for Symbian devices. Will give a small prayer for those getting the bad news, or maybe even worse, waiting over the next few months to get the message. I have been through this in 2006 with the automobile industry, and my Wife (retail manager) is going through it right now, as her store may be closed and she might be out of work. This is not fun times.

13. cdgoin

Posts: 614; Member since: Jul 28, 2010

Anyone remember when Motorola was on its deathbed..? They are only Android now and have a relationship tighter, but similar to the one MS has with Nokia. In the end Nokia will have the last laugh when thier Lumia series increases taking market share. Everyone seems to forget they were so far behind in teh smartphone market before the deal with MS it wasn't funny. Most Symbian phones they sold weren't smart phones but feature phones. The Lumia series are doing more for them than any of their previous "smartphones". So don't count them out right now, they could easily make a comeback as the premiere manufacturer for WindowsPhone8.

15. MartyK

Posts: 1043; Member since: Apr 11, 2012

Everyone keeps saying window phone will make a come back, it will take down the big two (Android & Apple). 1.Android fans--Loves customize, the power of the hardware,the ability to create roms / Tinkers 2.Apple Fans--Loves simplicity, Applications. The question is, who will window8 take customers from?, who are they targeting to be their customer?.

17. destr0y3r

Posts: 33; Member since: Jun 12, 2012

Lmao the ability to create roms ? Typical android fans here are nothing more than follow the instruction leechers.

16. WirelessCon

Posts: 311; Member since: May 11, 2010

How is that Windows OS working out for them?

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