Nokia layoffs 2023 will hit 14,000 employees, roughly around 16% of the company’s total workforce. The announcement came right after Nokia’s 2023 Q3 report was shared with the community. Here is everything you need to know about it!
In a major shakeup, Nokia, the Finnish telecommunications giant, has announced plans to reduce its workforce by up to 14,000 employees. This move is part of a broader restructuring strategy to adapt to a tougher market environment.
Nokia layoffs 2023: The company’s workforce Downsizing
Nokia, a major player in the 5G equipment market with around 86,000 people, is preparing to reduce its staff to 72,000 to 77,000 personnel. The primary objective is to reduce labor expenses, with savings of at least €400 million ($421.4 million) predicted by 2024. Nokia intends to save a total of €1.2 billion (almost $1.3 billion) over the following several years by the end of 2026.
Nokia Q3 2023 report announced
Nokia has presented its financial report for the third quarter of 2023, exhibiting considerable improvements in key performance measures.
When evaluated in constant currency, Nokia’s net sales fell 15% year on year during the third quarter of 2023. When it was reported, the drop was significantly higher, at 20%. This decline was principally driven by macroeconomic uncertainties and increased financing rates, which continued to put downward pressure on operator expenditure.
In the same period, the comparable gross margin reduced 120 basis points year-on-year, settling at 39.2%. The reported gross margin fared slightly worse, declining by 140 basis points to 38.7%. These shifts were primarily due to changes in the Mobile Networks segment across different regions. It’s worth noting, though, that the Mobile Networks gross margin actually improved by 140 basis points thanks to a more favorable regional mix.
For Q3 2023, the comparable diluted earnings per share (EPS) stood at EUR 0.05. In contrast, the reported diluted EPS was EUR 0.02. These figures reflect Nokia’s financial performance during the third quarter and its ability to adapt to challenging market conditions.
CEO Pekka Lundmark’s take on Nokia layoffs 2023
While acknowledging the effect of these layoffs, Nokia’s CEO, Pekka Lundmark, has informed staff that the business is committed to them at this difficult time. Lundmark says, “The most difficult business decisions to make are the ones that impact our people. We have immensely talented employees at Nokia and we will support everyone that is affected by this process.” This compassionate approach underscores Nokia’s commitment to its workforce.
“I remain confident in the fundamental drivers of our business. Data traffic growth continues, the 5G rollout is still only around 25% complete, excluding China, and networks will continued investment. Cloud computing and AI revolutions will not happen without significant investment in networks that have vastly improved capabilities,” he added.
Facing market challenges and moving forward
The layoff news coincided with Nokia posting weaker-than-expected profits. Sales fell 15% in the third quarter compared to last year’s period, owing to “macroeconomic uncertainty and higher interest rates affecting operator spending.” Furthermore, mobile network revenues fell by 19% in the third quarter due to a delay in 5G rollout, notably in India.
Interestingly, Nokia’s competitor, Ericsson, has expressed similar reservations about sales expectations for the second half of 2023, mirroring the industry’s collective anxiety about the present economic environment. Nonetheless, Nokia is optimistic for 2023, anticipating full-year sales of €23.2 billion to €24.6 billion ($24.4 billion to $25.9 billion).
Finally, Nokia’s choice to cut its personnel illustrates the company’s proactive attitude to changing market conditions. Nokia’s constant optimism and devotion to its workers demonstrate the company’s determination to retaining a strong presence in the volatile telecoms business.
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