Nokia has confirmed that is going to lay off an important part of its staff after verifying that its profits have plummeted in a year. In fact, according to the results of the third quarter of its fiscal year, which have just been made public, its sales in the period have registered a year-on-year decrease of 20% to 4.98 billion dollars, and profits in the same period have decreased at all. less than 69%, reaching 133 million euros. That is why they have decided to reduce costs, largely with layoffs, reducing personnel data by between 10% and 15%. It is estimated that up to 14,000 workers of Nokia will lose their jobs due to the situation.
The objective of this cut, which will reduce Nokia’s workforce from the current 86,000 workers to between 72,000 and 77,000, since they want to cut between 800 and 1,200 million euros until the end of 2026. The layoffs are part of a plan to reduce their basic costs and increased operational efficiency, with the aim of addressing the difficulties of the environment in the telecommunications sector. Its final size, however, will depend on the evolution of market demand.
Nokia is not the only European telecommunications company that will end 2023 with fewer employees than it started with. Earlier this year, Ericsson, one of the company’s main rivals, announced that it planned to lay off about 8,500 workers, also as part of a cost-cutting plan.
Nokia has been experiencing certain difficulties for some time now. Above all, due to the slowdown in the global economy, and the reduction in investment in telecommunications infrastructure undertaken by telephone and communications operators in many countries.
Sales of Nokia’s mobile networks division, the company’s main division, have therefore fallen by 24% year-on-year to 2.16 billion euros, and its profits have fallen by 64% in one year. Above all, due to the drop in investment in telecommunications infrastructure in North America. In addition, its sales volumes in India have been rated as moderate, given that 5G network deployments are already normalizing in many areas of the country. According to the company’s forecasts, its 2023 sales will remain between 23,200 and 24,600 million euros.
Pekka Lundmark, CEO of Nokiahas indicated that the drop in revenue from mobile networks is due to «some moderation in the pace of 5G deployment in India, which implies that its growth in the country has not been enough to cover its slowdown in North America«.
Despite everything, Lundmark remains confident «on the fundamental drivers» of his business, and emphasizes that «Data traffic growth continues, 5G rollout is only 25% complete excluding China, and networks will need continued investment. “The AI and cloud computing revolutions will not happen without significant investment in networks that have greatly improved capabilities.”
But Lundmark is also aware that he has a short-term problem, which is why he stressed that «Given that the time frame for market recovery is uncertain, we are not going to sit still and we are going to take decisive measures at three levels: strategic, operational and cost. First, we are accelerating the execution of our strategy by giving business groups more operational autonomy. Second, we are adjusting our business model by integrating sales teams into business groups, and third, we are resetting our cost base to protect profitability. I believe these measures will make us stronger and deliver significant value to our shareholders.«.
