Nokia is cutting 10,000 jobs and fired off a warning for its second quarter as it outlined a range of measures to return the business to profitability.
The Finnish manufacturer said it needed to substantially reduce its operating expenses in its Devices & Services division. It will do this by making cuts in research and development (R&D) projects, with the closure of facilities in Ulm, Germany and Burnaby, Canada. It will also consolidate some of its manufacturing operations, with the Salo facility in Finland set to close.
The company said it would also focus on prioritising key markets and cutting assets. It announced this morning it was selling its luxury phone arm Vertu to private equity firm EQT. It has also made a stream of appointments to its senior leadership team, with a number of departures at the end of June. These include Mary McDowell, executive VP for mobile phones, and Niklas Savander, executive VP of markets. Savander had only been given overall responsibility of the sales team in April. Jerri DeVard will also step down as chief marketing officer.
Nokia president and CEO Stephen Elop said: 'We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia. We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phone, while placing increased emphasis on our location-based services. However, we must reshape our operating model and ensure that we create a structure that can support our competitive ambitions.'
Nokia said it expects the job cuts to happen by the end of 2013. The manufacturer claimed the cuts, and other streamlining measures, would reduce its operating expenses from €5.35bn to €3.0bn by the end of that period. However, the restructuring will cost Nokia €1.9bn by the end of 2013. Elop said: 'These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength. We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.'
Looking ahead, Nokia said it will broaden the price range of its devices and reiterated its commitment to the Windows Phone partnership. It signed a deal with Swedish company Scalado for assets which it hopes will strengthen its imaging technology. Nokia is also going to invest in location-based services such as navigation and visual search. It said its mapping technology will be an area of focus, with plans to extend it to multiple industries 'to strengthen the platform and generate new revenue'. More Series 40 and Series 30 devices are set to be released, and it will continue investment in feature phone technology like the Nokia Browser.
In its senior team, Nokia has appointed former senior VP for supply chain Juha Putkiranta as its executive VP of operations. Timo Toikkanen, VP for business development, programs and special projects, has been appointed executive VP for mobile phones. Chris Weber, senior VP of markets for Americas, has stepped up to executive VP of sales and marketing. Tuula Rytila, senior VP of portfolio and business management, has been promoted to senior VP and chief marketing officer. Susan Sheehan, formerly VP of communications, has been appointed senior VP of communications.
Editor: Graeme Neill