Nokia Takes Drastic Measures: Plans to Slash 14,000 Jobs Following a 69% Profit Plunge

Nokia announced today its plan to slash up to 14,000 jobs in response to a significant decline in third-quarter earnings.

This move by the Finnish telecommunications giant aims to enhance operational efficiency and reduce costs in light of the challenging market environment.

The company’s goal is to reduce its cost base by 800 million euros ($842.5 billion) to 1.2 billion euros by the end of 2026, leading to a decrease in the number of employees from 86,000 to between 72,000 and 77,000.

This drastic reduction in workforce comes after Nokia reported a 20% year-on-year decline in third-quarter net sales, amounting to 4.98 billion euros. Profit during the same period also plummeted by 69% to 133 million euros.

Nokia’s competitor, Ericsson, also recently announced plans to cut 8,500 jobs as part of its own cost-cutting strategy.

Nokia, as one of the world’s leading telecommunications equipment manufacturers, has been facing challenging circumstances due to a slowing global economy and reduced infrastructure spending by mobile operators.

The company experienced a 24% year-on-year decline in sales from its mobile networks business, generating 2.16 billion euros in revenue. Operating profit for the division also dropped by 64%.

This decline was largely driven by decreases in North America, while sales volumes in India, an important market for Nokia’s involvement in the rollout of 5G technology, were described as “moderated.”

Cost-cutting measures have also been implemented in the United States, particularly by carriers such as Verizon and AT&T.

Nokia CEO Pekka Lundmark explained that the decline in mobile networks revenue was primarily due to a slowdown in North America and a moderation in the pace of 5G deployment in India.

Despite these challenges, the company maintains its full-year net sales forecast, expecting figures to range between 23.2 billion euros and 24.6 billion euros.

Lundmark expressed confidence in the underlying drivers of Nokia’s business, citing continuing data traffic growth, the ongoing rollout of 5G technology, and the need for significant investment in improved networks to support advancements in cloud computing and AI.

Sweden’s Ericsson, a competitor to Nokia, also reported declining revenue and similar issues in North America.

Ericsson CEO Borje Ekholm warned that uncertainties impacting the mobile networks business will persist until 2024, casting doubt on the recovery of telecommunications equipment manufacturers.