Nokia decides to downsize following their Q3 report
Finnish telecommunications giant Nokia has announced a significant restructuring plan in a blog post in response to a challenging market landscape.
As demand for next-generation 5G equipment weakened, the company experienced a substantial drop in third-quarter sales, prompting the need for cost-saving measures.
And the solution they came up with? Nokia layoffs 2023 which will affect around 14,000 jobs.
Financial targets of the company lead to Nokia layoffs 2023
Nokia aims to reduce its workforce by up to 14,000 jobs, a move to lower costs and adapt to the changing market conditions.
Nokia layoffs 2023 is representing approximately 16% of its current employee count, are part of a broader strategy to save between 800 million euros to 1.2 billion euros by 2026.
The company's goal is to achieve a long-term comparable operating margin of at least 14% by that year.
Harsh market challenges
Nokia's CEO, Pekka Lundmark, expressed the extent of the market's challenges, particularly in North America, where the company witnessed a striking 40% decrease in net sales in the third quarter.
The slowdown in countries like the United States has prompted Nokia and its rival Ericsson to explore alternative markets, such as India, to compensate for the dip in demand.
While cost-saving measures are a necessity, Lundmark emphasized his commitment to protecting research and development efforts. The specifics of the restructuring plan will be developed in consultation with employee representatives.
However, Nokia expects to achieve a substantial portion of the savings by 2024, with an additional amount in 2025.
Nokia Q3 2023 financial results say it all
Nokia's Q3 2023 financial results have been reported as follows:
- Q3 net sales experienced a decline of 15% in constant currency terms compared to the previous year
- The company expects full-year 2023 net sales to be in the range of EUR 23.2 to 24.6 billion
- Nokia anticipates a comparable operating margin in the range of Citation: Investegate
These results reflect the challenges Nokia is facing in the competitive telecommunications market and its efforts to adapt to changing conditions.
The uncertainty in telecommunication
The uncertainty affecting the telecommunications industry is expected to persist, with Ericsson also indicating potential challenges until 2024. Nevertheless, Nokia foresees a more typical seasonal improvement in its network businesses in the fourth quarter and has not altered its full-year outlook.
Lundmark stressed the importance of industry investment in faster mid-band equipment to accommodate the ever-growing data traffic, as only 25% of 5G base stations outside of China currently have mid-band capabilities.
Despite the uncertainties, Nokia remains committed to the mid-to-long-term market. Lundmark affirmed that they will not merely wait for market recovery, recognizing the need for proactive measures in these evolving market conditions.
Featured image credit: NokiaAdvertisement