Nokia to cut up to 10,000 jobs by end of 2013
June 15, 2012, 12:11 am TWN
HELSINKI -- Finland's Nokia, one of the world's biggest mobile phone makers, announced Thursday that it planned to cut up to 10,000 jobs by the end of next year due to massive additional cost-savings measures.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," company Chief Executive Stephen Elop said in a statement.
Following the news, Nokia, which only recently lost the world number one ranking maker spot it had held for 14 years, saw its shares plunge more than 6 percent on the Helsinki stock exchange, which was down nearly 1 percent.
The company, which has been undergoing a major restructuring for more than a year, said it would implement an additional 1.6 billion euros (US$2 billion) in cost reductions by the end of 2013.
"To support this period of transition, Nokia intends to improve its operating model by significantly reducing its Device & Services operating expenses, substantially reducing its headcount and reducing its factory footprint," it said.
The changes would result in the closure of Nokia's facilities in Ulm, Germany, Burnaby, Canada, and its manufacturing plant in Salo, Finland, although its research and development operations in Salo would continue.
It also said it would "streamline" its IT, corporate and support functions and would reduce and possibly divest non-core assets.
"As a result of the planned changes announced today, Nokia plans to reduce up to 10,000 positions globally by the end of 2013," the company said, adding that it had begun discussions with unions and other employee representatives.
Analysts were caught off guard by the announcement.
"These cuts were bigger than anyone expected. We knew that something would happen but this was well beyond our expectations," Sami Sarkamies, a Nordea Bank analyst, told AFP.
Nokia also announced a massive management reshuffle.
"We must reshape our operating model and ensure that we create a structure that can support our competitive ambitions," Elop said.
The company said that by the end of the first quarter this year it had spent some 450 million euros on its restructuring efforts and expected to spend another 650 million euros over the balance of the year.
In 2013, restructuring costs should stand at 600 million euros.