Nokia Announced 10,000 Layoffs to Cut the Costs
The Finnish company Nokia today announced a broad restructuring plan that includes 10,000 layoffs worldwide by the end of 2013, in order to cut costs and curb its steady decline in the complex mobile phone market.
This plan will, among other measures, a reduction in force affecting 7.7% of the 130,000 employees of the company and the closure of several production facilities in Finland, Canada and Germany.
In addition, Nokia will dispose of those assets that are not considered priority, including its subsidiary luxury mobile phones Vertu, whose sale to a venture capital company Nordic was announced officially today, but did not transcend the financial details of the operation.
Nokia will also make extensive remodeling of its board of directors, which will fire several executives held responsible for the plight of the company, including Jerri Devard (VP Marketing), Mary McDowell (Mobile) and Niklas Savander (Markets).
The aim of the Finnish giant is to cut annual operating costs of Devices and Services division to 3,000 million euros by end 2013, 5,350 million compared to 2010.
Thus, the technology company seeks to halt the drain on their reserves of capital that suffers from the second quarter of 2011, when he began to significant losses.
Between January and March 2012, Nokia lost 1,572 million euros net, which will add another 1,164,000 for the year 2011.
“The planned cuts are a result difficult to believe that the measures we take to ensure long term competitiveness of Nokia,” he said in a statement the company’s CEO, Stephen Elop.
Nokia revised downward their forecasts for the second quarter because it has sold less “smartphones” (smart phones) than expected, so it now expects its operating margin of profit is still lower than in the first quarter, when it stood at 3% negative.
This announcement caused a sharp drop in Nokia shares on the Helsinki Stock Exchange, which collapsed part-time 10% and trading at two euros per share.
The decline of the Finnish manufacturer, world leader until a few months ago, began shortly after Apple will revolutionize the market for “smartphones” with the launch of its first iPhone in January 2007.
Since then, Nokia has lost 85% of its market value, has seen its profitability fade and has given the South Korean group Samsung a world leader both in the lucrative segment of “smartphones” as in the global market for mobile telephony.
Even the signing as CEO Stephen Elop, ex directive Microsoft, and a commitment to its mobile operating system, Windows Phone, managed to stop the continuing loss of market share in all sectors.
Both Samsung, with its Android devices, including Apple and the iPhone clearly exceeded the model based on Windows Phone Nokia and Symbian in the segment of “smartphones”.
In the first quarter of 2012, Nokia sold only 8.2% of smart phones were sold worldwide, up from 30.6% to 24% Samsung and Apple, according to tech consultancy Strategy Analytics.
To make matters worse, the Asian manufacturers of basic phones have usurped much of its market share in the segment of low-end terminals in emerging countries, thanks to an aggressive pricing strategy and despite the launch of the family Asha.
The situation of the company concerned especially in Finland, the country that has suffered the 40,000 layoffs announced since the arrival of Elop to Nokia, with the closure of several factories and research and development (R & D).
The measures announced today will mean the closure of the assembly plant in Salo, the last to be held in the Nordic country, and laying off about 3,700 employees in Finland.
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