Despite the uncertainty in the third quarter, Nokia said it expects an “improvement in our network businesses in the fourth quarter.”
Employment Jobs: Finnish telecom giant Nokia on Thursday said that the company would cut up to 14,000 jobs as profits fell on weakening demand for its 5G equipment in North America. It is important to note that the announcement adds to the series of layoffs in the tech industry following a boom during Covid pandemic lockdowns.
“In the third quarter we saw an increased impact on our business from the macroeconomic challenges,” CEO Pekka Lundmark said in a statement. The company has further added that the its savings programme is expected to reduce staffing to as low as 72,000, cutting costs by up to 1.2 billion euros ($1.14 billion) by 2026.
The programme targets business areas Mobile Networks, Cloud and Network Services and corporate functions. “The most difficult business decisions to make are the ones that impact our people,” Lundmark noted.
Nokia reported that its profits reached 133 million euros in the third quarter, a 69 percent drop from the same period a year ago. “The earnings were much weaker than expected and the outlook is more uncertain. So it’s not looking that good in the short term for Nokia,” Atte Riikola, an analyst at equity analysis firm Inderes, told AFP.
Despite the uncertainty in the third quarter, Nokia said it expects an “improvement in our network businesses in the fourth quarter.” But Riikola believed that Nokia’s “estimates will come down pretty dramatically.”
“There’s a possibility for a negative profit warning,” he added.
Slowdown of 5G
Locked in a competition for 5G networks with Swedish rival Ericsson and China’s Huawei, Nokia’s sales dropped by 20 percent to 4.98 billion euros in the third quarter of 2023. Nokia had hoped that its 5G rollout in India would compensate for a slowdown in spending by North American telecom operators this year, but was faced with a disappointment.
“We saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America,” Lundmark said.
(With Inputs From Agency)