Nokia, once Europe’s most valuable company by market capitalization, announced another massive wave of layoffs on Thursday, shedding 14,000 of its employees, Reuters reported.
The Finnish company’s announcement on Thursday comes after weak demand for next-generation 5G equipment caused revenue to fall 20 percent in the third quarter of this year. Nokia also said after the publication of financial data that it does not expect the market to recover in the near future.
The price of its shares on the stock market fell by 5% after this statement.
Both Nokia and rivals Ericsson are struggling to find solutions to lower demand in countries such as the US, part of an effort to boost sales to India, a low-margin market.
“The market situation is really difficult, and this is evidenced by the fact that in our most important market, North America, our net sales fell by 40% in the third quarter,” Nokia CEO Pekka Lundmark told Reuters in an interview. .
Nokia hopes the layoffs will help it save between 800 million and 1.2 billion euros by 2026, a deadline it has set for an operating margin of at least 14 percent.
Nokia lays off 16% of its employees
By then, the company plans to reduce its employee base from 86,000 to 72,000-77,000, or about 16% of the workforce.
The new wave of layoffs comes after Nokia announced two years ago that it would cut 10,000 jobs by 2023 to cut costs.
Lundmark declined to provide further details on the new layoffs, saying they were after consultation with employee representatives. But he said Nokia wants to protect its research and development units.
Nokia hopes to save at least 400 million euros in 2024 and another 300 million in 2025.
Ericsson, which has also cut thousands of jobs this year, said on Tuesday that the uncertainty affecting the market will continue into next year.
“We continue to believe in the market in the medium to long term, but we will not sit back and pray that the market recovers soon,” the Nokia chief also said on Thursday.
“We just don’t know when it will recover,” said Pekka Lundmark, adding that “there are signs here and there that demand will pick up again, but it’s too early to talk about the broader trend.”
Source: Hot News
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