Nokia To Cut 1,800 Jobs

The cell phone maker will cut more than 3% of its overall work force in an effort to make its networks division profitable again

InformationWeek Staff, Contributor

April 10, 2003

2 Min Read

HELSINKI, Finland (AP) -- Cell phone giant Nokia Corp. said Thursday it will eliminate 1,800 jobs, or 3.4 percent of its overall work force, in a bid to return its networks division to profitability.

The division, which makes equipment for telecommunications networks, has been hit hard as operators and providers cut spending on their current networks and postpone plans for new, faster networks in a bid to preserve cash.

Most of the 1,800 cuts will be in research and development, operations, and sales and marketing, the company said. The company said 1,100 jobs would be cut in Finland. The other 700 positions eliminated will be in other countries around the world.

In February, Nokia said it would cut 550 network operations jobs in the United States, Britain, Sweden and Finland. The division employs 18,500 workers worldwide.

Overall, Nokia employs approximately 53,000 workers in 130 countries.

Besides the job cuts, the company said it would also focus more on research and development.

"We are determined to continue with our leadership strategy, targeting leadership position in mobile networks," said Sari Baldauf, president of Nokia Networks. "The measures outlined today support this objective."

Analysts have said Nokia Networks unit has undermined the cell phone maker's other operations, including its hand set manufacturing.

Jussi Hyoty, an analyst with FIM Securities in Helsinki, said Nokia's network division had been suffering for several years and the cuts didn't come as a surprise.

"It's certainly not the beginning of the end for Nokia," Hyoty said. "The markets had been expecting something like this and Nokia hadn't made any bones about their problems in the networks division."

Nokia is the cell phone market leader with about 35.8 percent of all mobile phones sold worldwide, according to Gartner Dataquest. Last year, Nokia claimed a 38 percent market share.

Last month, Espoo-based Nokia warned that sales of its network equipment would be below expectations for the first quarter and its chief financial officer, Olli-Pekka Kallasvuo warned that it needed to make "significant" cost cuts.

The company said it expected the unit to "post a substantial pro-forma operating loss for the first quarter" on a 20 percent drop in sales, but didn't cite specific figures.

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