Nokia to cut 10,000 jobs; shut units

[mullu]

Mobile handset major Nokia on Thursday said it will cut up to 10,000 jobs globally by the end of 2013 and shut down some facilities.

“Nokia plans to reduce up to 10,000 positions globally by the end of 2013. Nokia is beginning the process of engaging with employee representatives in accordance with country-specific legal requirements,” it said in a statement.

As of March 31, 2012, Nokia employed 1,22,148 people. Of these, 68,595 were employed by Nokia Siemens Networks.

Nokia said it is balancing its investment priorities and plans to rescale the company by making additional reductions in devices and services.

Under these planned measures, it will reduce certain research and development projects which will result in closure of its facilities in Ulm, Germany and Burnaby, Canada.

It will further consolidate manufacturing operations and close a facility in Salo, Finland. However, R&D development in Salo will continue.

The company said it will focus on marketing and sales activities, including prioritisation of key markets. It will simultaneously streamline its IT, corporate and support functions.

Nokia said it will make reduction in portfolio related to non-core assets, including possible divestments.

Taking into account these planned measures the company now targets to reduce its Devices and Services operating expenses to an annualised run rate of approximately 3 billion euro by the end of 2013.

Nokia said this is an update to Nokia’s target to reduce Devices & Services (non-IFRS) operating expenses by more than 1 billion euro for 2013, compared to 2010 expenses of Euro 5.35 billion.

“In addition to the already achieved annualised run rate saving of approximately 700 million euro at the end of first quarter 2012, the company targets to implement approximately 1.6 billion euro of additional cost reductions by the end of 2013,” the statement said.

In line with this, Nokia today announced plans to divest its luxury mobile phones business, Vertu to an European private equity firm EQT VI.

The company said it will invest strongly in products and experiences that make Lumia smartphones stand out and in location-based services as an area of competitive differentiation.

Nokia said the cost reduction measures are designed to return its Devices and Services business to sustainable operating profitability as soon as possible.

The company expects further charges of about 1 billion euro relating to restructuring activities in this business by the end of 2013.

“This is in addition to cumulative charges of approximately 900 million euro recognised as of the end of first quarter 2012 in connection with previously announced restructuring activities,” the statement said.

By the end of the first quarter of 2012, Nokia had cumulative restructuring related cash outflows of about 450 million euro.

From second quarter onwards, Nokia expects restructuring related cash outflows to be around 650 million euro this year and 600 million euro in 2013.

Of the total expected charges relating to restructuring activities of 1.9 billion euro, Nokia expects non—cash charges to be about 200 million euro, the statement said.

[abhisays]

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