Nokia to cut up to 14,000 jobs after 5G slowdown

(Sharecast News) - Swedish telecoms giant Nokia on Thursday announced plans to cut up to 14,000 jobs as part of a €1.2bn cost savings programme over the next three years. The news came as the company reported a 20% drop in net sales in its third quarter to €4.98bn, due to "macroeconomic challenges that are pressuring operator spending".

Network infrastructure sales were down 18% at €1.81bn, while mobile networks sales dropped 24% to €2.16bn as a result of a slowdown in 5G deployment in India and North America.

The operating profit margin sank 350 basis points over the year to just 4.8%, meaning operating profits sank 53% to €241m.

Nokia is now targeting €800m to €1.2bn in gross cost savings by the end of 2026 as it attempts to get back on track to its long-term target operating margin of "at least 14%". The new strategy will "reduce its cost base and increase operational efficiency while protecting its R&D capacity and commitment to technology leadership", the company said.

"The program is expected to lead to a 72,000 to 77,000 employee organisation compared to the 86 000 employees Nokia has today."

Commenting on the results, president and chief executive Pekka Lundmark said: "Looking forward, while our third quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter.

"Based on this and assuming we resolve the outstanding renewals impacting Nokia Technologies, we are tracking towards the lower end of our net sales range for 2023 and towards the mid-point of our comparable operating margin range."

Shares were down 1.9% at €3.20 by 1139 EEST in Helsinki.