Nokia has announced it plans to cut 14,000 roles as it contends with plummeting sales.
The firm said the job cuts are part of a cost reduction drive to compensate for a rapid decline in sales across the last year.
Net sales at Nokia declined 20% year-over-year in the third quarter, while profits over the same period decreased by 69%.
This was largely driven by “macroeconomic uncertainty and higher interest rates”, the organization said, which have put pressure on customer spending.
In a statement, Nokia said the layoffs will deliver marked cost savings for the firm in the coming years. The Finnish telecoms giant is targeting savings of between $842 million and $1.37 billion by 2026.
The move will see the company deliver initial savings of around $421 million across 2024 and additional savings of $316 million in 2025.
“These actions keep us on track to deliver our long-term target comparable operating margin of at least 14% by 2026,” Nokia said in a statement.
Nokia said it plans to “act quickly” on the employee and cost reduction strategy. In total, the program will reduce its workforce from 86,000 to between 72,000 and 77,000.
Prepare your organization against future attacks and hold cyber security at its core.
DOWNLOAD NOW
Pekka Lundmark, president and CEO of Nokia, said the decision to cut staff is a necessary step to compensate for intense market pressures.
“The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process,” he said.
“Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness. We remain confident about opportunities ahead of us.”
Decreased customer demand
Sluggish demand for 5G and telecoms equipment in key markets such as the United States has played a key role in the decision to cut jobs, Nokia revealed.
It isn’t alone in experiencing decreased demand for equipment in recent months, either. Quarterly earnings from Ericsson, a fellow telecoms equipment manufacturer and competitor, revealed a significant decrease in revenue.
The Swedish giant reported a dip in revenue during the most recent quarter, with customer spending in North American markets contributing largely to the decline.
The concerning revenue figures prompted a 9% decrease in share value for the firm, bringing its value to a six-year low.
