April 26, 2024

Nokia to Eliminate 3,500 More Jobs

BERLIN — Nokia, the Finnish cellphone maker, said Thursday that it would eliminate 3,500 jobs, or 6 percent of its work force, by closing a factory in Romania and transferring production to more efficient plants in Asia.

The unexpected announcement, which sent Nokia’s shares up 2 percent in Helsinki, was the second wave of cuts this year from the company, a former global market leader, which began a 12 percent reduction in employee numbers in April.

The Nokia chief executive, Stephen Elop, described the Romanian plant closure as part of the company’s continuing effort to streamline production and meet consumer demand for smartphones, and to prepare for Nokia’s software collaboration with Microsoft.

“We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” Mr. Elop said in a statement. “We must take painful, yet necessary, steps to align our work force and operations with our path forward.”

Pete Cunningham, an analyst at Canalys, a research firm in Reading, England, agreed that Nokia was going through a period of unavoidable downsizing.

“The closure in Romania is unfortunate, but they have to streamline,” Mr. Cunningham said. “Over the years, they have grown really fat. Now they are in a process of trimming.”

“It is still going to be a couple of tough financial quarters ahead for Nokia,” he continued. “But we are hearing positive messages about their Windows Phone products.”

The company’s shares have fallen by half since Mr. Elop, a former Microsoft senior executive, announced in February that new Nokia phones would include the Windows Phone operating system by Microsoft.

The company’s decision to abandon Symbian, its proprietary operating system, caused some Nokia customers to balk at purchasing the soon-to-be obsolete models. Nokia responded by cutting prices on Symbian models, contributing to its €368 million, or $502 million, loss in the second quarter.

Nokia is expected to introduce the first of its models running the Windows Phone operating system at an investor conference in London on Oct. 26. Mr. Cunningham said he expected Nokia to present one or two new models at the event, probably high-end devices aimed at the year-end holiday season.

Mr. Elop said Wednesday that Nokia would be transferring the manufacture of the low-end phones made in Cluj-Napoca, Romania, to larger factories in China and South Korea, where Mr. Elop said production costs and economies of scale were more favorable.

The previous round of 7,000 job cuts, which is to be completed by the end of 2012, included the transfer of 2,800 employees to Accenture, a business technology consultant, next month.

With the new round of cuts, Nokia intends to shrink its devices and services work force, which stood at 59,150 at the end of June, by approximately 18 percent through next year.

In a separate announcement, Nokia said its former chief executive, Olli-Pekka Kallasvuo, had decided to leave the company and his position as nonexecutive chairman of Nokia Siemens Networks, its unprofitable network equipment venture with the German company Siemens.

Mr. Kallasvuo, who was the chief financial officer to Jorma Ollila, the chief executive who was the architect of Nokia’s early success, was succeeded by Mr. Elop last September after four years as chief executive. He then took charge of the equipment venture, for which Nokia and Siemens have been seeking new investors. The venture had a loss of €111 million in the second quarter.

Nokia said Mr. Kallasvuo would be succeeded by Jesper Ovesen, the former chief financial officer at TDC, the Danish phone operator, who was being appointed to help make Nokia Siemens a “more independent entity.”

To sustain the venture, which is under pressure from low-cost competitors like Huawei, the Chinese equipment maker, Nokia and Siemens on Wednesday agreed to each inject €500 million into the company.

In a statement, the companies said the €1 billion infusion was intended “to further strengthen the company’s financial position and set the stage for strategic flexibility, productivity and innovation in areas such as mobile broadband and related services.”

Article source: http://feeds.nytimes.com/click.phdo?i=6c4d45daa1de37a535a3aa2acdd7a2ac