The job cuts, which follow reductions of 550 R&D jobs in its networking division announced in February, will leave the networks operation with 15,000 on the payroll, compared with 17,300 at the beginning of the year.
Networks has been a drain on Nokia for some time, and the company’s overall financial strength has led it to delay cut-backs while competitors have had no alternative but to bring their costs into line with the depressed state of the market.
However, the final straw came last month when Nokia scaled back its first-quarter sales and profit forecasts, after poor demand for networking equipment forced it to trim its sales guidance. Sales at Nokia Networks are expected to decline by 15% to 20% year-on-year, as operators continue to resist spending. It said this would result in a substantial operating loss at the unit.
In 2002, Nokia Networks’ sales fell 13% to 6.5bn euros ($7bn), though the 49m euro ($52.7m) operating loss was down on the 73m euros ($78.5m) recorded in the previous 12 months. The company’s only consolation was that its market share grew as it calculated that its accessible market contracted by 15% over the year.
Nokia said it does not expect conditions to improve markedly during 2003 and forecast that its accessible market would contract a further 5% to 10%.
Up to 1,100 of the 1,800 job cuts will be in Finland, and it said the reductions will be made in R&D, operations, sales and marketing and support functions. Clearly, Nokia is preparing to ditch some product lines as it is reviewing the costs, scope and timing of the number of R&D programs. It said its aim is to ensure the market product and architectural leadership in GSM, EDGE and WCDMA markets while further increasing the focus and efficiency of R&D activities.
Source: Computerwire
