March 1, 2024

Nokia to Cut 7,000 Jobs in Cost-Cutting Move

BERLIN — Nokia, the world’s leading cellphone maker, said Wednesday that it would slash about 7,000 jobs as part of a cost-cutting program that is deeper than expected.

The 12 percent reduction in the Finnish company’s global work force will help trim operating costs by €1 billion, or $1.47 billion, a 17 percent reduction, by the end of 2012. Analysts had expected job cuts of between 5,000 and 6,000.

Stephen Elop, the former Microsoft executive who became Nokia chief executive in September, said the cuts and reorganization were needed to prepare Nokia for its partnership with Microsoft. Nokia plans to eventually phase out the Symbian operating system as it rolls out smartphones next year running Microsoft Windows Phone software.

“With this new focus, we also will face reductions in our work force,” Mr. Elop said. “This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs.”

In a statement, Nokia said the reductions would be achieved by eliminating 4,000 jobs, mostly in Britain, Denmark and Finland, and by transferring 3,000 employees responsible for its Symbian operating system to Accenture, a global technology consultant to businesses.

The company, which is based in Espoo, Finland, employed 59,080 in its cellphone business at the end of 2010. The figure excludes staff at Nokia Siemens Networks, its network joint venture, and at Navteq, a U.S. mapping data company it also owns.

Nokia produced 108.5 million mobile phones last year, supplying 32 percent of the global market, but the company this year ceded the lead in cellphone revenue to Apple, the maker of the iPhone, according to Strategy Analytics, a research firm.

In addition to the job cuts, which will become official following negotiations with labor representatives, Nokia said it planned to consolidate its research and development division so that each site has a clear role and mission. Nokia has mobile phone RD sites in Finland, China, India, Germany, England, Denmark and San Diego.

Some sites will grow, others will contract and some will be closed as a result of the reorganization, Nokia said, without providing further details.

“This move was largely anticipated and follows Nokia’s need to reduce its cost structure,” said Michael Schroder, an analyst at FIM Bank, a private bank in Helsinki.

Nokia’s failure to capitalize on the smartphone boom has cost the Finnish company market share and prestige as the center of gravity in its industry has shifted from hardware and communications to software and applications.

That boom is still going strong, said Ericsson, the global leader in wireless network equipment, on Wednesday, as it reported that demand for mobile broadband lifted its own sales by 17 percent in the first quarter from a year earlier to 53 billion Swedish kroner, or $8.7 billion.

Profit at Ericsson, based in Stockholm, more than tripled to 4.1 billion kroner from 1.3 billion kroner a year earlier, which the company attributed to cost-cutting and greater profitability in its networks business.

Most of the demand came from the United States and Canada, Ericsson said, where wireless operators like Verizon Wireless, ATT and Rogers Communications are expanding the capacity of their 3G networks and installing new, even faster, networks based on a technology called Long-Term Evolution to handle rising traffic.

Ericsson said the level of data traffic on the world’s global mobile networks doubled in 2010 from 2009 and will continue to double each year for the next few years.

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