Nokia to cut 180 Finnish jobs in 2020

Nokia plans to cut about 180 jobs in its home country of Finland this year under restructuring efforts designed to slash operating expenses and boost profitability.

The Finnish equipment vendor, whose main international rivals are China's Huawei and Sweden's Ericsson, said the latest cuts would affect staff at nearly all Finnish locations but mainly those working at its headquarters in Espoo.

The plans announced today will have no impact on its 5G product development team and Oulu plant, said Nokia in a statement on the Finnish-language section of its website.

Negotiations with employee representatives about the latest redundancies are set to begin on January 21.

Nokia currently employs about 6,000 people in Finland and had about 103,000 employees worldwide in 2018.

It has yet to publish details of staff numbers for 2019 but is trying to save about €500 million ($556 million) annually under its latest cost-cutting plan. Early last year, it announced plans to cut more than 1,300 jobs across Finland, France and the UK.

Previously, Nokia's cost-saving target was for €700 million ($778 million), but this was lowered in late 2019 to free up cash for investment in the 5G business, which has run into product-related difficulties.

Accordingly, it has hired about 370 new employees in Finland and will continue investing in "certain priority areas" in the country, said Tommi Uitto, the head of Nokia's mobile business.

The update comes after Nokia announced in October it had then recruited about 350 employees for research and development activities. At the time, the company said it had been recruiting mainly for system-on-a-chip development but declined to provide staff numbers for its overall R&D function.

Nokia's product issues stem largely from its use of so-called field programmable gate arrays (FPGAs) instead of application-specific integrated circuits (ASICs). The company had hoped the FPGAs -- chips that can be reconfigured after the design stage -- would provide flexibility and give Nokia a 5G time-to-market advantage over its rivals.

FPGAs, however, are more expensive than ASICs, meaning Nokia's 5G products have been less profitable than rival gear. Last year, CEO Rajeev Suri also said Nokia had been let down by one of its FPGA component suppliers, which is thought to be Intel.

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Having originally aimed for an operating margin of between 12% and 16% this year, Nokia was forced to lower this guidance to about 9.5% last year, when it published its third-quarter results. It managed an operating margin of 5.3% for the first nine months of 2019, down from 6.7% for the year-earlier period.

"The savings program we launched in 2018 has progressed as planned," said Tommi Uitto, the head of Nokia's mobile business, in a statement about today's news. "We will continue to improve our operational capability and ensure the long-term competitiveness of the company. These decisions are not easy, and we will do our best to support our staff during the change process."

Nokia's share price has taken a battering in the last year, falling from a high of €5.74 on January 21 last year to just €3.63 today.

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— Iain Morris, International Editor, Light Reading

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