(Photo: by JUSSI NUKARI/Lehtikuva/AFP via Getty Images) A photo taken on October 19, 2023, shows the headquarters of Finnish telecom company Nokia in Espoo, Finland. Nokia said on October 19 that it would cut up to 14,000 jobs as profits fell on weakening demand for its 5G equipment in North America. The announcement adds to a series of layoffs in the tech industry following a boom during Covid pandemic lockdowns.
After reporting a 20 percent decline in third-quarter revenues due to decreased demand for 5G equipment, Nokia announced on Thursday that it will eliminate up to 14,000 positions to slash costs. However, the company cautioned that it did not anticipate a quick recovery in the market.
At 0900 GMT, shares of the Finnish business that makes telecom network equipment were down 2 percent, according to Reuters.
As one of the most lucrative markets for Nokia and Ericsson and the home of Verizon and AT&T, the slowdown in the United States forced them to hunt for development in other areas like India. But now, following a great 2022, India is also anticipated to return to normal.
Saving Money, Cutting Jobs
By 2026, Nokia hopes to save between 800 million and 1.2 billion euros ($842 million). It anticipates cutting between 72,000 and 77,000 jobs, or at the high end, nearly 16 percent of its current 86,000 workforce.
Lundmark declined to provide further information, stating that the business must first confer with employee representatives. He said he intended to safeguard research and development, nevertheless.
Nokia anticipates making savings of at least 400 million euros in 2024 and another 300 million euros in 2025.
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Layoffs Until 2024?
On Tuesday, Ericsson, which has also made hundreds of layoffs this year, predicted that the uncertainty afflicting its industry will last until 2024.
However, Nokia, which mirrored Ericsson's remarks on uncertainties, predicted that its network businesses would have a more typical seasonal improvement in the fourth quarter. The business kept its full-year forecast unchanged.
Although companies have been hesitant to adopt the new technology, 5G was hailed as the industry that would usher in the age of automation and autonomous automobiles.
Telecom companies have been struggling with their investment budgets due to poor growth and have started making their own cost reductions.
While Vodafone aims to eliminate 11,000 roles, the British company BT Group (BT.L) earlier this year disclosed intentions to eliminate 55,000 jobs.
While low-band equipment is more affordable but provides slower 5G speeds, several telecom operators started their 5G deployment using it.
Comparable net sales for the third quarter decreased to 4.98 billion euros from 6.24 billion last year, falling short of the LSEG poll's prediction of 5.67 billion euros.
Nokia was formerly the largest cellphone maker in the world, but it was dethroned from its throne by competitors after failing to foresee the popularity of internet-enabled touchscreen phones like Apple's iPhone and Samsung's Galaxy.
Nokia focused on telecom equipment after selling its handset division to Microsoft, which the software giant eventually wiped down.
It specializes in software and hardware for the telecommunications industry, including base stations and antennas, as well as the physical and cloud infrastructure that users use to make and receive phone calls and access the internet.
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