New Delhi: The telecom Gear manufacturer Nokia said on Thursday, October 19, that it would cut up to 14,000 positions as part of a fresh cost-cutting drive. This came after third-quarter sales dropped by 20%, primarily due to lower sales of 5G equipment.
Nokia and rival Ericsson both have struggled with the weakening demand for 5G equipment in nations like the US. Still, they have attempted to make up for part of the shortfall by increasing sales to India, a low-margin market.
Nokia wants to produce a long-term comparable operating margin goal of at least 14% by 2026, and it is aiming to save between US$842 million and 1.2 billion euros by then.
The company released a statement claiming that the initiative is anticipated to result in an organisation with 72,000 people, down from 86,000 now.
“Nokia expects to act quickly on the programme, with at least 400 million euros of in-year savings in 2024, and a further 300 million euros in 2025.”
“While the ongoing uncertainty impacted our third-quarter net sales, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter,” Pekka Lundmark, chief executive Of Nokia, stated.
Ericsson, which has also let go of thousands of workers this year, declared on Tuesday that it will continue to face financial uncertainties until 2024.
Nokia said it would relocate to a more compact corporate headquarters to increase strategic focus, safeguard R&D expenditure, and provide business divisions with more significant operational independence.
“Resetting the cost base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness,” Pekka Lundmark stated.
Together with Ericsson of Sweden, Huawei of China, and Samsung of South Korea, Nokia is one of the major global suppliers of 5G, the newest generation of broadband technology. In an effort to minimise expenses, Ericsson also stated earlier this year that it is laying off 8% of its global employees.