Nokia Announces Company Restructuring, Laying Off 10,000 Workers
Nokia has gloomy news for its workforce – the company just announced major restructuring plans with the intent to cut 10,000 jobs globally by the end of 2013. They‘ve set in motion plans to shut down R&D facilities in Canada and Germany and a manufacturing facility in Salo, Finland. Along with the reductions, a number of execs on the Nokia Leadership Team will also be reshuffled.
“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” said Stephen Elop, Nokia president and CEO. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”
Nokia plans to streamline their IT, corporate, and support functions along with reductions of non-core related assets. The company already made a move toward cutting non-core assets by divesting their luxury phone brand, Vertu, to European private equity firm EQT VI. They also want to focus on marketing and sales in key markets – a move the company desperately needs to make if they ever hope to see their Windows Phone-based Lumia line make headway in the global phone market.
“We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia,” added Elop. “We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”
With the Finnish company facing even more operating losses, these planned reductions are an effort to move the company toward profitability as the company undergoes a major transition. However, these new restructuring plans coupled with a prior reduction announcement will cost an estimated €1.9 billion.
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Nokia’s layoffs was the lead article in tonight’s Marketplace (NPR). They post the stories on a 24-hour delay, so you can hear it tomorrow at npr.org.
Basically, they said this may sound bad, but it may help them stay competitive in the short and long run. I got the impression that the analysts were generally in favor of this.
Of course, on the US stock market, Nokia dropped 16% today, and is nearly half of what it was 3 months ago. That being said, of course, the US market is NOT the be-all and end-all that they would like to be; although it is not to be taken lightly, either.
While I’m sure shedding some of the fat will help, analysts are still really down on Nokia’s future. The majority of analysts seem to be predicting an even bleaker future ahead.
I think Apollo and Windows 8 will help, but there are a lot of variables at play.