Nokia Announces Shake-Up as Phone Maker Forced to Cut Outlook Again
Finnish phone maker Nokia announced a new series of layoffs and executive changes, as the company once again cut its quarterly forecast.
Nokia, which is chopping earnings projections for the third time in little more than a year, said on Thursday that it will cut a further 10,000 jobs in the coming months. That comes on top of previously announced layoffs.
The company said that its smartphone business is even weaker than expected, amid stiff competition from Apple and Android products. As a result, the company said operating margins in its core devices and services business will be even worse than last quarter’s negative-3 percent.
“The strength of Android, particularly as it pushes down in price point, is clearly something that has caused a lot of challenge,” CEO Stephen Elop said on a conference call with analysts.
It’s the second time Nokia has cut its outlook for the current quarter, which was already lowered in April.
“We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services,” Elop said in a statement. “However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”
Three top executives are leaving the company, including Mary McDowell, the head of Nokia’s low-end phone business. Also departing are executive VP Niklas Savander and marketing chief Jerri DeVard. Americas head Chris Weber will take over as head of all sales and marketing.
As part of the restructuring, Nokia said it will close a manufacturing plant in Salo, Finland, and will end research and development efforts in Ulm, Germany, and Burnaby, Canada.
During a conference call with analysts, Nokia said it is cutting jobs as fast as it can without further hurting its sales.
The company said it will focus on specific markets with the biggest opportunity and strongest strategic opportunity, while holding off on other countries. Over time, the company said, it is critical that Windows Phone reach 10 percent market share — several times its current position.
Elop said that the company believes it has the cash it needs to manage its way through the transition. Nokia has seen repeated downgrades to its credit rating since announcing its shift to Windows Phone.
The company announced that it has managed to find a buyer for its Vertu luxury phone business. The company said it may make further divestitures.
On the other side of the M&A front, Nokia said it was buying assets from Swedish imaging firm Scalado.