In response to a “weaker” market environment, Nokia will cut as many as 14,000 jobs, the company revealed in a statement on Thursday. This move is part of a broader restructuring effort to reduce its workforce from the current 86,000 employees to a range of 72,000 to 77,000.
Nokia Announces Plans to Reduce its Workforce
This step is anticipated to lower the company’s staffing costs by 10% to 15% and yield savings of at least €400 million ($421.4 million) in 2024. In total, Nokia expects these reductions to reduce its expenses by up to €1.2 billion (almost $1.3 billion) by the end of 2026. Nokia (NOK) expressed its commitment to making swift changes.
CEO Pekka Lundmark stated in the announcement, “The most challenging business decisions are those that affect our employees. We have highly skilled employees at Nokia, and we will provide support to everyone affected by this process.
Poor Q3 Sales Amid Macroeconomic Challenges
The announcement coincided with Nokia’s release of results that were below expectations. The company reported a 15% drop in sales for the third quarter compared to the same period the previous year, attributing this decline to “macroeconomic uncertainty and increased interest rates affecting operator spending.
Furthermore, the third-quarter mobile network sales fell by 19% compared to the previous year, primarily due to the slowing pace of 5G deployment in markets like India.
This week, Ericsson, a Swedish competitor, also cautioned that second-half sales in 2023 were expected to be lower than usual, echoing Nokia’s comments about a “challenging environment and macroeconomic uncertainty.
Nonetheless, Nokia has upheld its 2023 outlook, projecting full-year sales between €23.2 billion and €24.6 billion ($24.4 billion and $25.9 billion).
Lundmark stated, “We maintain our belief in the long-term appeal of our markets.
