Friday, June 15, 2012

Nokia cuts 10,000 jobs

Finland’s leading cell phone manufacturer, Nokia, has decided to cut 10,000 jobs and shut down some of its facilities globally as it announces the news of higher than expected losses in the coming quarter. The company will also record additional restructuring costs of $1.3bn by December, 2013.

The company’s new CEO Stephen Elop took charge about 2 years ago in September, 2010 and since then, the firm has cut about 40,000 jobs. "These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Mr. Elop has said. 

The sites being shut down include those in Finland, Germany and Canada. The layoff will also include some of the company’s executives such as Niklas Savander, Mary McDowell and Jerri DeVard.

It has already closed its plant in Romania while the company is considering converting its Finland, Hungary and Mexico plants from phone assembly to software customization.

Since February, 2011, the company’s shares have fallen by more than 70% as it switched from its own ‘Symbian’ smart phone operation system to Microsoft’s Windows phone system.

Growing Competition.

Nokia is also expected to sell its luxury handset Vertu’s business unit to EQT, a private equity firm, as it faces tough competition in the global cell phone market from Apple and Samsung. Through Vertu, the company manufactures and sells one of the world’s most expensive cell phone that comes with crystal displays and sapphire keys.

Samsung has recently overtaken Nokia as the leading cell phone manufacturer. In the first quarter of the current year, Nokia’s shipments have fallen almost by a quarter. It was able to ship around 2 million Lumia smartphones, as opposed to Apple which sold 35.1 million iPhones in the same period.

Nokia Siemens
The company’s joint venture with Siemens, which has around 68,500 employees, is also struggling amid fierce competition. It is also planning to cut 17,000 jobs by the end of next year. 

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