Nokia to Slash Jobs Following AlcaLu Merger

Finnish vendor Nokia has started cutting jobs following the recent completion of its €15.6 billion (US$17.7 billion) takeover of French rival Alcatel-Lucent. (See Nokia Begins Job Cuts Process.)

In a short statement published Wednesday morning, Nokia Corp. (NYSE: NOK) said the headcount reductions would form a part of its "synergy" program: It has been working toward a goal of realizing €900 million (US$1.02 billion) in operating cost synergies in 2018. (See Nokia, AlcaLu Steady Ship on Costs Before Tie-Up.)

Nokia currently has 104,000 staff. The company declined to say how many staff would be impacted by the cuts, adding that it didn't plan to reveal a global number during any part of the process. A spokesman did say, however, that all 124 countries where the vendor has operations will be affected and that local announcements would be issued to provide further details of the headcount reduction processes.

The first of those local announcements has already appeared: According to a statement published in Finnish, Nokia is currently in negotiations to reduce staff numbers in Finland by around 1,300. Nokia claimed to have 6,942 employees in Finland prior to its takeover of Alcatel-Lucent (NYSE: ALU).

The vendor also declined to provide any clarification about the lines of business that will be affected, but noted that areas where there is overlap with the Alcatel-Lucent business will be the hardest hit. The company's mobile networks division looks set to take a significant knock and, indeed, that area of business was called out last October, when Nokia noted that the planned cost reductions would come from a "wide range of initiatives related to operating expenses and cost of sales," including:

  • Streamlining of overlapping products and services, particularly within the planned Mobile Networks business group;
  • Rationalization of regional and sales organizations;
  • Rationalization of overhead, particularly within manufacturing, supply chain, real estate and information technology;
  • Reduction of central function and public company costs; and
  • Procurement efficiencies, given the combined company's expanded purchasing power.

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Nokia says representatives are meeting today with its two European Works Councils and that consultations will take place with employees in almost 30 countries in the coming weeks.

"These actions are designed to ensure that Nokia remains a strong industry leader," said Rajeev Suri, Nokia's president and CEO, in the company's statement. "When we announced the acquisition of Alcatel-Lucent we made a commitment to deliver €900 million in synergies -- and that commitment has not changed. We also know that our actions will have real human consequences and, given this, we will proceed in a way that that is consistent with our company values and provide transition and other support to the impacted employees."

Nokia's shares were trading up 1% in Helsinki following today's announcement.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

danielcawrey 4/8/2016 | 9:20:32 PM
Re: Cuts in mobile and corporate functions are expected but... I'm actually surprised Nokia has over 100,000 employees. I'm not exactly keeping track over here, but it would seem that since its exit from the mobile business it might not need so many people.

Sure, I realize that some of this has to do with other lines or business and acquistions. But it's still my first reaction. 
[email protected] 4/6/2016 | 7:28:10 AM
Cuts in mobile and corporate functions are expected but... Cuts in mobile and corporate functions are expected but if the headcount cull starts to impact the IP division, for example, then that could cause internal friction.

Nokia ppears to have managed the M&A and integration process OK so far so let's see how this painful part of the process is handled. The Nokia top team, of course, have gone through this before, whehn NSN was cut back dramatically.
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