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Nokia Will Sever Up To 14,000 Jobs Following A 69% Decline In Profits

Nokia Will Sever Up To 14,000 Jobs Following A 69% Decline In Profits
Following a sharp decline in third-quarter profitability, Nokia announced on Thursday that it would eliminate up to 14,000 positions as part of a cost-cutting strategy.
The massive Finnish telecom company declared that in order to "address the challenging market environment," it will lower its cost base and boost operational effectiveness.
By the end of 2026, it hopes to have reduced its cost base on a gross basis by 1.2 billion euros, or 800 million euros, from 2023.
As a result, the present workforce of 86,000 will drop to anywhere between 72,000 and 77,000.
The significant layoffs follow Nokia's announcement that its third-quarter net revenues fell 20% year over year to 4.98 billion euros. Over that time, profit fell to 133 million euros, a 69% year-over-year decline.
Nokia's competitor Ericsson revealed earlier this year that it intended to reduce staffing levels by 8,500 as part of a cost-cutting strategy.
Nokia, one of the biggest manufacturers of telecom equipment worldwide, has been having difficulties due to the weakening global economy and the decline in infrastructure spending by mobile operators.
The mobile networks section of Nokia, which generates the majority of the company's revenue, had a 24% decrease in sales to 2.16 billion euros in the previous year, and a 64% decline in operating profit.
According to Nokia, North American declines were the primary cause of this. Additionally, the business stated that as 5G deployments "normalise," sale volumes in India, a significant market, are "moderated." Next-generation mobile internet, or 5G, is being rolled out in India with Nokia as a partner. 5G promises higher speeds.
This year, there have also been cost-cutting initiatives in the US, especially with providers like Verizon and AT&T.
In a statement released on Thursday, Nokia CEO Pekka Lundmark claimed that "some moderation in the pace of 5G deployment in India meant the growth there was no longer enough to offset the slowdown in North America" was to blame for the drop in income from mobile networks.
The company has not altered its projection and continues to project full-year net revenues in the range of 23.2 billion to 24.6 billion euros.
“I remain confident in the fundamental drivers of our business,” Lundmark said.
“Data traffic growth continues, the 5G rollout is still only around 25% complete, excluding China, and networks will continued investment. Cloud computing and AI revolutions will not happen without significant investment in networks that have vastly improved capabilities.”
Nokia's figures follow the release of third-quarter results by Ericsson, a Swedish company, on Wednesday. The reports revealed a drop in sales and comparable problems in North America.
The "underlying uncertainty impacting" Ericsson's mobile networks business will continue until 2024, the company's CEO Borje Ekholm cautioned in a statement on Wednesday, raising doubts about the prospects for telecommunications equipment manufacturers' comeback.

Christopher J. Mitchell

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