Nokia to cut up to 14,000 jobs

HELSINKI: Finnish telecom giant Nokia said on Thursday it would cut up to 14,000 jobs as profits fell on weakening demand for its 5G equipment in North America.

The announcement adds to a series of layoffs in the tech industry following a boom during Covid pandemic lockdowns.

«In the third quarter, we saw an increased impact on our business from the macroeconomic challenges,» Chief Executive Officer Pekka Lundmark said in a statement.

Nokia's savings program is expected to reduce staffing to as low as 72,000, cutting costs by up to 1.2 billion euros ($1.14 billion) by 2026, the company said.

The program targets business areas Mobile Networks, Cloud and Network Services, and corporate functions.

«The most difficult business decisions to make are the ones that impact our people,» Lundmark noted.

Nokia reported that its profits reached 133 million euros in the third quarter, a 69-percent drop from the same period a year ago.

«The earnings were much weaker than expected, and the outlook is more uncertain. So it's not looking that good in the short term for Nokia,» Atte Riikola, an analyst at equity analysis firm Inderes, told Agence France-Presse (AFP).

Despite the uncertainty in the third quarter, Nokia said it expects an «improvement in our network businesses in the fourth quarter.»

But Riikola believed that Nokia's «estimates will come down pretty dramatically.»

«There's a possibility for a negative profit warning,» he added.

Slowdown of 5G

Locked in a competition for 5G networks with Swedish rival Ericsson and China's Huawei, Nokia's sales dropped by 20 percent to 4.98 billion euros in the third quarter of 2023.

Nokia had hoped that its 5G rollout in India would compensate for a slowdown in spending by North American telecom operators this year, but was faced with disappointment.

«We saw some moderation in the pace of 5G deployment in India, which meant the growth there was no longer enough to offset the slowdown in North America,» Lundmark said.

Shorthand for fifth-generation mobile technology, 5G holds the potential to enable lightning-fast video downloads and innovations like high-speed autonomous vehicles.

But due to the global economic downturn, both Nokia and