Nokia has announced another huge shake-up of the company,
with the loss of 10,000 jobs by the end of next year. While planning to
significantly reduce its operating expenses, Nokia also announce an increased
emphasis on location-based services. The planned job losses are expected to
come from the closure of its facilities in Ulm, Germany and Burnaby, Canada and
in its homeland, Salo, Finland. The company confirmed that research and
development efforts in Salo will continue though.
Nokia is also making changes to its management team.
"These planned reductions are a difficult consequence of
the intended actions we believe we must take to ensure Nokia's long-term
competitive strength," said Stephen Elop, Nokia president and CEO.
"We do not make plans that may impact our employees lightly, and as a
company we will work tirelessly to ensure that those at risk are offered the
support, options and advice necessary to find new opportunities."
In Smart Devices, Nokia plans to broaden the price range of
Lumia and continuing to differentiate with the Windows Phone platform, new
materials, new technologies and location-based services. In line with this
strategy, Nokia today announced the planned acquisition of assets from
Sweden-based Scalado, which currently has imaging technology on more than 1
billion devices.
In Mobile Phones, Nokia intends to improve its
competitiveness and profitability. Nokia aims to further develop its Series 40
and Series 30 devices, and invest in key feature phone technologies like the
Nokia Browser.
Taking into account these planned measures the company now
targets to reduce its Devices & Services operating expenses to an
annualized run rate of approximately EUR 3 billion by the end of 2013. This is
an update to Nokia's target to reduce Devices & Services operating expenses
by more than EUR 1 billion for the full year 2013, compared to the full year
2010 Devices & Services non-IFRS operating expenses of EUR 5.35 billion.
This means that in addition to the already achieved
annualized run rate saving of approximately EUR 700 million at the end of first
quarter 2012, the company targets to implement approximately EUR 1.6 billion of
additional cost reductions by the end of 2013.
Nokia also announced today a number of changes to its senior
leadership. Nokia announced that it has appointed Juha Putkiranta as executive
vice president of Operations; Timo Toikkanen as executive vice president of
Mobile Phones; Chris Weber as executive vice president of Sales and Marketing;
Tuula Rytila as senior vice president of Marketing and Chief Marketing Officer;
and Susan Sheehan as senior vice president of Communications.
Jerri DeVard steps down as chief marketing officer; Mary
McDowell steps down as executive vice president of Mobile Phones; and Niklas
Savander steps down as executive vice president of Markets.
During the second quarter 2012, competitive industry dynamics
are negatively affecting the Smart Devices business unit to a somewhat greater
extent than previously expected.
Furthermore, while visibility remains limited,
Nokia expects competitive industry dynamics to continue to negatively impact
Devices & Services in the third quarter 2012. Nokia now expects its
non-IFRS Devices & Services operating margin in the second quarter 2012 to
be below the first quarter 2012 level of negative 3.0%. This compares to the
previous outlook of similar to or below the first quarter level of negative
3.0%.
"Nokia is significantly increasing its cost reduction
target for Devices & Services in support of the streamlined strategy
announced today," said Timo Ihamuotila, executive vice president and CFO.
"With these planned actions, we believe our Devices & Services
business has a clear path to profitability. Nokia intends to maintain its
strong financial position while proceeding aggressively with actions aimed at
creating shareholder value."