Nokia Corporation has made a bold move to address cost reduction and enhance financial stability.
The company recently disclosed its intentions to carry out significant layoffs as part of its strategic response to challenges in the market.
Nokia To Fire 14000 Employees In Cost Cutting Move
The decision comes on the heels of a discouraging 20 percent decline in third-quarter sales, primarily attributed to sluggish demand for 5G equipment in key markets, with North America being particularly affected.
In an official statement released on Thursday, Nokia announced plans to eliminate a substantial number of jobs, potentially affecting up to 14,000 employees, as part of a broader effort to streamline operations and curtail expenses.
The overarching objective of Nokia’s cost-cutting strategy is to realize savings in the range of 800 million to 1.2 billion euros by the year 2026. The company’s ultimate aim is to align itself with its long-term target of achieving a comparable operating margin of at least 14 percent by 2026.
This ambitious cost-saving initiative is expected to lead to a leaner workforce, reducing the current employee count of 86,000 to a range between 72,000 and 77,000.
Nokia Anticipates 400 Million Euros in Savings
The company’s announcement highlights that this program is designed to yield immediate benefits, with a minimum of 400 million euros in in-year savings anticipated by 2024, along with an additional 300 million euros in 2025. This strategic approach reflects Nokia’s proactive stance in addressing the challenges posed by the fluctuating 5G equipment market and changing customer demands.
Notably, the company’s comparable net sales for the third quarter took a substantial hit, dropping to 4.98 billion euros, a stark contrast to the 6.24 billion euros reported during the same period the previous year. This outcome fell short of the estimated 5.67 billion euros, as indicated by an LSEG poll. Despite these challenges, Nokia’s leadership remains optimistic about the potential for a turnaround, with Chief Executive Pekka Lundmark expressing confidence in a more typical seasonal improvement for their network businesses in the upcoming fourth quarter.
It’s important to note that Nokia is not alone in the decision to reduce its workforce. Several major tech companies, including Microsoft, Google, Meta, Twitter, and others, have also undertaken large-scale layoffs as part of their cost-saving efforts to enhance their business operations. This trend underscores the broader industry response to economic challenges and the pursuit of greater efficiency.
