Nokia Announces 14,000 Job Cuts in Response to Q3 2023 Earnings Plunge

Nokia Announces 14,000 Job Cuts in Response to Q3 2023 Earnings Plunge

UTC by Benjamin Godfrey · 3 min read
Nokia Announces 14,000 Job Cuts in Response to Q3 2023 Earnings Plunge
Photo: Depositphotos

Nokia’s cost reduction plan is a strategic move aimed at addressing the challenging market environment it currently faces.

Finnish telecommunications giant Nokia Oyj (HEL: NOKIA) has revealed plans to cut up to 14,000 jobs as part of a comprehensive cost reduction strategy, prompted by a substantial drop in Q3 2023 earnings.

Nokia Job Cut Reduction Strategy

According to reports, Nokia’s decision to cut jobs and streamline its operations is in direct response to its third-quarter earnings report, which made clear the extent of the company’s challenges. The company reported a substantial 20% year-on-year decline in net sales, which dropped to 4.98 billion Euros.

Additionally, profit for the period plummeted by a staggering 69% year-on-year, coming in at just 133 million Euros. One of the primary factors contributing to Nokia’s earnings decline is the slowing global economy.

The telecommunications industry is highly sensitive to economic fluctuations, and as the global economy faces headwinds, companies like Nokia inevitably feel the impact. Additionally, mobile operators’ decisions to cut back on infrastructure spending have also taken a toll on Nokia’s financial performance.

Nokia’s cost reduction plan is a strategic move aimed at addressing the challenging market environment it currently faces. The company intends to enhance its operational efficiency and trim down its cost base, starting in 2023.

Nokia has set a target to reduce its cost base by between 800 million Euros ($842.5 million) and 1.2 billion Euros by the end of 2026. This reduction is expected to result in a downsizing of the workforce, taking the number of employees from its current 86,000 down to a range between 72,000 and 77,000.

Mobile Networks Business Struggles

Nokia, like many other technology companies, has been affected by a slowing global economy. Reduced consumer spending and uncertainty in the market have had a ripple effect on the telecommunications industry.

The heart of Nokia’s operations, its mobile networks business, faced significant difficulties in the third quarter. Sales from this unit, which generates the most revenue for the company, declined by 24% year-on-year to 2.16 billion Euros. The division’s operating profit took an even more severe hit, plummeting by 64% year-on-year.

Nokia attributed much of this decline to struggles in North America, a key market for the company. Sales volumes in India were also described as “moderated,” with the company noting that 5G deployments were beginning to normalize.

Nokia’s cost reduction plan, while difficult for its employees, may be necessary to navigate these turbulent times. The company, which has a long history in the telecommunications sector, will need to adapt to shifting market dynamics and continue investing in research and development to stay competitive.

Meanwhile, Nokia is not the only technology giant facing financial challenges. Samsung Electronics Co Ltd (KRX: 005930), has also reported a significant drop in operating profit, largely due to the prolonged slump in memory chip prices. However, analysts remain hopeful that the semiconductor industry will rebound, potentially boosting profitability in the fourth quarter with significant production cuts.

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