Nokia Announces Major Restructuring: In a strategic shift, Nokia has unveiled plans to reshape its operations, which includes a significant reduction of up to 14,000 jobs, equivalent to around 16% of its workforce, to be implemented over the next three years. This comes as the company faces significant challenges, including a 20% drop in sales and a 69% decline in profits in the most recent quarter, compared to the same period last year.
The tech giant, once a leader in the mobile phone market, has been redefining its focus since selling its mobile phone division to Microsoft in 2013. Instead, Nokia has concentrated on providing the essential infrastructure for telecom systems to various businesses, including wireless companies and cable operators.
Nokia’s CEO, Pekka Lundmark, emphasized that this overhaul is a response to the challenging market environment, with the aim of safeguarding profitability. The cost-cutting measures are expected to generate savings of up to 1.2 billion euros (approximately $1.3 billion).
Also Read: 5G Chipset Market Growth: Projections, Analysis, and Key Players 2022-2031
The company’s struggles extend beyond financial performance. It has faced intense competition in the 5G technology sector, with Chinese companies, particularly Huawei, dominating nearly half of the global market. Additionally, macroeconomic uncertainties and higher interest rates have put pressure on Nokia’s customers.
Furthermore, Nokia faced scrutiny and challenges related to its business in Russia, having halted sales in the country following Russia’s invasion of Ukraine in March 2022. The company had been providing equipment to MTS, Russia’s largest telecom service provider, and documents revealed its involvement in a Russian surveillance system over the years.
Nokia’s move to restructure echoes the challenges faced by its Western counterparts in the telecom industry. Ericsson, one of Nokia’s main competitors based in Sweden, has also resorted to substantial layoffs due to lower demand for its products and services, compounded by rising energy prices, inflation, and interest rate pressures.
This overhaul marks a critical moment in Nokia’s journey as it strives to navigate a changing landscape in the telecommunications industry.
Our Reader’s Queries
Why did Nokia need to restructure?
In response to difficult market conditions and a slowdown in 5G deployment, Nokia is revamping its business and cutting up to 14,000 jobs. The company anticipates that this restructuring will result in savings of $850 million to $1.3 billion by 2026.
Is Nokia laying off employees 2023?
Nokia Corporation, a telecommunications giant with a 150-year history, has announced job cuts this month. The company, which is among the largest in its industry, revealed disappointing Q3 2023 numbers and plans to reduce its workforce by up to 14,000 employees.
What is Nokia’s new strategy 2023?
Our company is taking a proactive approach to digitalization by implementing a series of strategic initiatives aimed at boosting our performance and competitiveness. These initiatives are focused on enhancing efficiency, productivity, and agility across our internal operations, customer experience, and R&D. By leading by example, we hope to inspire others to follow suit and embrace the benefits of digitalization.
What is the future of Nokia?
Nokia aims to outpace the market with both NI and CNS growth until 2026. However, Mobile Networks may face some hurdles in 2024 and 2025 before bouncing back to faster growth than the market in 2026. Nokia’s other targets remain steady.