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.
Closures
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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