Nokia to layoff 10000 people by 2013, close factories
The news from the Nokia camp could not have been worse. Nokia has announced that it will be laying go of 3,700 people in Finland. In addition to that the total layoffs in Nokia globally will be to the tune of 10,000 people by 2013. The 3700 people in Finland represents a 25% reduction of the total workforce employed in Nokia, Finland.
If that was not all, Nokia is also going to be shutting down its facilities in Ulm, Germany and Burnaby, Canada and also at its manufacturing facility in Salo, Finland (Research and Development efforts in Salo will remain) while focusing on their Lumia line of phones including ”broadening the price range of Lumia and continuing to differentiate with the Windows Phone platform”.
Elop elaborated on this new step taken by Nokia.
“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” added Elop. “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.”
Taking into account these planned measures the company now targets to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately EUR 3.0 billion by the end of 2013. This is an update to Nokia’s target to reduce Devices & Services non-IFRS operating expenses by more than EUR 1.0 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.
To read the complete release, head on to Nokia Press.
While investment firms and analysts have been underrating the Nokia stock and even assigning it ‘Junk’ status, this further news comes as a huge setback for the company. What makes it very disturbing overall is that Jerri DeVard, executive vice president and chief marketing officer; Mary McDowell, executive vice president of Mobile Phones; and Niklas Savander, executive vice president of Markets are leaving the company. The complete release to this regard can be found here.
The company just recently announced their acquisition of Scalado on one hand and the sale of Vertu and this downsizing on the other hand. This dichotomy is sure to leave many bewildered about what exactly is happening there in Espoo.
Whatever it is be the stock hasn’t taken it too well and has seen a substantial downward trajectory.
The screenshot shows how badly the markets have taken this news.The unions have already started raising their voices within Nokia and are calling for action.
It certainly is a day of bloodbath for Nokia. The transition is having adverse effects on people and many other things. It’s clear that Nokia is in the same spot where, RIM was and we can see what’s transpired there. It’s not been smooth sailing for Nokia globally, they’ve lost tremendous market share in the smartphone segment and ceded their pole position to Samsung. Nokia alignment towards Windows Phone seems to be wrecking havoc internally for them. One just wonders how many people will leave the company voluntarily across its subsidiaries now that this news is out.
Nokia’s current news comes in a time when the industry is seeing consolidation – reduced no. of eco-systems, increased standardization, greater awareness towards smartphones and greater adoption rate as well. Apple’s numbers have been very encouraging, and Andy Rubin of Google just recently reported that they are seeing an average of 900,000 activations daily for their Android platform, a rough indication of the no. of people adopting the platform. Nokia on the other hand could manage only two million Lumia smartphones. In Q1 of 2012, handset shipments from Nokia decreased by 24%.
It is definitely looking extremely dark for Nokia and I can only hope and pray that they are able to weather this storm and come out stronger and better! it’s time for Plan ‘B’ and ‘C’ if you ask me!
Stephen Elop’s burning platform memo has resulted in grievous short term damage for the company and he needs to quickly turn around the company without engaging in too many distress asset sales. Let’s hope that June 20 announcement has some positive indications for Nokia. Microsoft will be watching closely how its actions and trajectory is proving to be detrimental to its biggest partner! And if they are they’d better be taking notes.