Light Reading
There's a lot of detail in Nokia's massive restructuring announcement – here are the key details, point by point

Nokia Cuts 10,000 Jobs, Restructures

Ray Le Maistre
LR Mobile News Analysis
Ray Le Maistre, Editor-in-chief
6/14/2012
50%
50%

Nokia Corp. (NYSE: NOK) has unveiled a major restructuring process in an effort to become a profitable and more relevant company.

The Finnish mobile company, which recently lost its long-held position as the world's leading device maker to Samsung Corp. , has been struggling in the face of competition from the Android-based smartphone vendors, Apple Inc. (Nasdaq: AAPL) and a new wave of low-cost feature-phone players, reported a massive loss for the first three months of this year and is the subject of much speculation about its future. (See Euronews: Takeover Rumors Lift Nokia, Nokia Loses Its Mobile Crown and Nokia Loses More Than €1.57B.)

With the second quarter's performance looking dire, CEO Stephen Elop has decided to take drastic measures in order to survive the onslaught, though his tactics and the outlook for the next few quarters have sent investors running to the hills -- Nokia's share price is down 11 percent to €1.98 Thursday morning on the Helsinki stock exchange.

Here are the key details announced early Thursday.

  • Nokia is to cut up to 10,000 jobs worldwide by the end of 2013. As part of this it will shrink its IT, corporate and support functions. In February the company announced the loss of 4,000 jobs. (See Nokia Cuts 4,000 More Jobs .)

  • Certain R&D projects will be reduced, resulting in the closure of research facilities in Ulm, Germany, and Burnaby, Canada.

  • Manufacturing operations will be further consolidated, resulting in the closure of facilities in Salo, Finland. R&D operations will continue in Salo.

  • None-core assets will be shrunk, closed or sold. As part of this process, Nokia has agreed to sell a majority stake in its luxury mobile phone unit, Vertu , to private equity firm EQT VI for an undisclosed sum. Nokia will retain a 10 percent stake in Vertu, which is based in the U.K. and employs about 1,000 staff.

  • The cost-cutting measures, which will result in €1 billion (US$1.26 billion) of restructuring charges, should help the company reduce its annual operating expenses (excluding one-time charges such as restructuring costs) at its Devices & Services (smartphones and feature phones) line of business by €1.6 billion ($2 billion), leaving its annual operating expenses run rate at €3 billion ($3.77 billion) by the end of 2013.

  • The company has promoted internally to create a new senior team (from July 1): Juha Putkiranta will be executive vice president of Operations; Timo Toikkanen will replace outgoing Mary McDowell as executive vice president of Mobile Phones; Chris Weber will be executive vice president of Sales and Marketing; Tuula Rytila becomes senior vice president of Marketing and chief marketing officer, replacing current CMO Jerri DeVard, who is leaving the company; and Susan Sheehan will be senior vice president of Communications. In addition, executive vice president of Markets, Niklas Savander, is leaving the company. In April, Nokia announced that global sales leader Colin Giles was leaving on June 30. (See Nokia Streamlines Sales Management.)

  • Nokia's smartphone sales are shaping up to be worse than expected during the second quarter, which closes June 30, while "competitive industry dynamics" are set to make the third quarter a tough one too. The company now expects its Devices & Services second-quarter operating margin (before one-time costs) to be worse than the first quarter's negative 3 percent, compared with its previous expectation of recording an operating loss about the same as the first quarter's.

  • The company, which has three business units (Devices & Services, Location & Commerce, and Nokia Siemens Networks) believes the changes can reverse its fortunes and make it a growing, profitable company again. It intends to invest in its location-based services that can be integrated into its phones and focus its device developments on the Lumia range. As part of this strategy it has agreed to acquire Swedish imaging technology specialist Scalado for an undisclosed price, a move that will give it technology, intellectual property and development staff.

    CCS Insight analyst Ben Wood noted on Twitter that the resizing of the company is a "necessary evil" but that Nokia "can't keep cutting forever." He added that the purchase of Scalado is "astute… [a] great asset underlining Nokia is going big in imaging."

    Nokia has been having a tough time of late.



    — Ray Le Maistre, International Managing Editor, Light Reading

    (4)  | 
    Comment  | 
    Print  | 
  • Newest First  |  Oldest First  |  Threaded View
    SReedy
    50%
    50%
    SReedy,
    User Rank: Blogger
    12/5/2012 | 5:30:17 PM
    re: Nokia Cuts 10,000 Jobs, Restructures


    Wow, that's a lot of changes to take in. It's interesting that Nokia wants to compete on location more.  It has owned Navteq for awhile now, but has not done much with it. With Apple and Google's recent map-related announcements, that space is getting pretty interesting. 

    digits
    50%
    50%
    digits,
    User Rank: Light Beer
    12/5/2012 | 5:30:15 PM
    re: Nokia Cuts 10,000 Jobs, Restructures


    It sees its location-based apps as a differentiator but will consumers view it that way?


    If Lumia doesn't capture more people's imaginations in the next 6 months then whether it has in-house service capabilities to integrate might become irrelevant.

    krishanguru143
    50%
    50%
    krishanguru143,
    User Rank: Light Beer
    12/5/2012 | 5:30:14 PM
    re: Nokia Cuts 10,000 Jobs, Restructures




    There are two main cartography companies, Nokia owns one and TomTom the other.  So even though Apple released their new navigation app, it relies on the cartography from TomTom.

     

    Nokia needed to cut 10,001 jobs, not 10,000.  The "extra" one is none other than Elop himself. He put the company in the position it currently is in.  Sooner or later, the shareholders and the board need to accept the fact that Elop is not the person for the job.  WP7 is about as irrelevant as you can get in the mobile sector, so it is impossible to become relevant with an irrelevant product.

    Cutting 10,000 jobs is a drastic measure, but he said the same thing about transitioning to WP7.  How has that worked out?  One drastic measure now requires another.  NOK also is ever nearing the point of being delisted, all they need to lose is another ~$1.40 and then continue to close under $1.00 and a delisting will be a certainty unless Nokia can prove a turnaround is in the works.  Unless that turnaround involves dumping WP, I can’t see them staying listed as their current plans have failed miserably.




    Rush21120
    50%
    50%
    Rush21120,
    User Rank: Light Sabre
    12/5/2012 | 5:30:14 PM
    re: Nokia Cuts 10,000 Jobs, Restructures


    For Nokia the train has already left the building for location-based services as that fight is now Google and Apple.  Catching either of them without clear distinction (and I don't know what that is for Nokia) will be next to impossible so best case they get overflow.  Nokia missed the train/boat many years ago. 


    As for promoting within thats great but unless these folks are visionaries and ones without the Noika view it won't help Nokia. 

    Flash Poll
    From The Founder
    It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
    LRTV Custom TV
    Using Service Quality to Drive WiFi Monetization

    10|22|14   |   6:51   |   (0) comments


    Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
    LRTV Custom TV
    Distributed Access Architectures – 2

    10|21|14   |   8:51:00 AM   |   (0) comments


    ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
    LRTV Custom TV
    Distributed Access Architectures – 1

    10|21|14   |   9:01   |   (0) comments


    SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
    LRTV Custom TV
    The WiFi Road to Riches – 2

    10|21|14   |   3:58   |   (0) comments


    ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
    LRTV Custom TV
    The WiFi Road to Riches – 1

    10|21|14   |   10:15   |   (0) comments


    SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
    LRTV Custom TV
    Advantech Accelerates 100G Traffic Handling

    10|17|14   |   7:56   |   (0) comments


    Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
    LRTV Huawei Video Resource Center
    Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

    10|16|14   |   4:49   |   (0) comments


    Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
    LRTV Huawei Video Resource Center
    Huawei's Comprehensive Storage Solutions Vital for SVR

    10|16|14   |   6:16   |   (0) comments


    SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
    LRTV Huawei Video Resource Center
    Mexico's Servitron's Impression of Huawei at CCW 2014

    10|16|14   |   6:35   |   (0) comments


    Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
    LRTV Huawei Video Resource Center
    Building a Better Dubai

    10|16|14   |   2:06   |   (0) comments


    Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
    LRTV Huawei Video Resource Center
    Huawei Lights Up Malaysia Partner Maju Nusa

    10|16|14   |   1:59   |   (0) comments


    Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
    LRTV Custom TV
    Evolving From HFC to FTTH Networks

    10|15|14   |   2:19   |   (0) comments


    Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
    Upcoming Live Events
    October 29, 2014, New York City
    November 6, 2014, Santa Clara
    November 11, 2014, Atlanta, GA
    December 2, 2014, New York City
    December 3, 2014, New York City
    December 9-10, 2014, Reykjavik, Iceland
    February 10, 2015, Atlanta, GA
    June 9-10, 2015, Chicago, IL
    Infographics
    WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
    Hot Topics
    Is Health the Killer App for the IoT?
    Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
    Drones Hover Over the IoT Sector
    Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
    Analysts Warn of Major NFV Gaps
    Carol Wilson, Editor-at-large, 10/22/2014
    Roku Raises $25M, But for What?
    Mari Silbey, Independent Technology Editor, 10/23/2014
    AT&T: Merger Review Halt Won't Hurt Us
    Alan Breznick, Cable/Video Practice Leader, 10/23/2014
    Like Us on Facebook
    Twitter Feed