Clear the decks: Nokia cuts 10,000 jobs in radical shake-up

Nokia is to lose 10,000 workers and transform its management team in a bid to return to profitability, the Finnish handset manufacturer has said.

A series of moves, which also includes the selling-off of luxury handset division Vertu and the acquisition of imaging technology from Scalado, was announced early on Thursday. The heads of Nokia's mobile phone, markets and marketing departments have also been ousted as part of the reorganisation.

Nokia is to cut 10,000 people from its workforce as it looks to 'broaden' the price range of its Lumia phones. Image credit: Ben Woods/ZDNet

"We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia," Nokia chief Stephen Elop said in a statement. "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."

Although Nokia's UK representatives refused to say whether this forms part of the 10,000 figure or not, 1,000 job cuts will take place by selling off Vertu, a move that was expected. The luxury handset division, which coats normal Nokia phones in precious stones and sells them alongside a 'concierge' service, is headquartered in the UK, although its 1,000 workers are spread around the world.

Vertu is to be sold to the private equity firm EQT VI, although Nokia will retain a 10 percent minority stake in the business.

Nokia has not broken down its lay-off numbers by country — indeed, the company's representatives refused to say how many people Nokia employs in the UK, let alone how many cuts will take place here. However, Nokia did say it would be closing research and development facilities in Ulm, Germany, and in Burnaby, Canada.

The company's manufacturing plant in Salo, Finland, is also going to be shut down, although R&D will continue at the site. Jobs will also go among Nokia's marketing, sales, IT, corporate and support staff, the company added.

"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Elop said. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."

Cheaper Lumia, better photos

The renewed focus on Lumia, Nokia's range of smartphones running Microsoft's Windows Phone OS, will make the devices "available to more consumers", the company said.

We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones.

– Stephen Elop, Nokia

Nokia explained that it would be "broadening the price range" of Lumia, which almost certainly means the introduction cheaper phones. The manufacturer will also move to further differentiate its Windows Phone implementations from others, by using "new materials, new technologies and location-based services".

Buying imaging technology from Sweden's Scalado is apparently part of that strategy. Nokia pointed out that Scalado's tech, for taking, editing and viewing photos, is used on more than a billion devices.

"Nokia has been working with Scalado for more than ten years and they've contributed to many of our leading imaging applications," Nokia smart devices executive vice president Jo Harlow said in a statement. "This transaction would enable us to combine our leadership in camera devices with their expertise in imaging, helping people move beyond taking pictures to capturing moments and emotions and then reliving them in many different ways."

The Scalado deal comes with a site in Lund, Sweden, which is to become "a key site for Nokia's imaging software for smartphones", alongside existing facilities in Espoo and Tampere, both of which are in Finland.

The upper management shake-up will see a few Finns promoted to C-level seats. Although markets EVP Niklas Savander is one casualty — with no explicit replacement being announced — Timo Toikkanen will replace Mary McDowell as mobile phones chief and Tuula Rytila is to be the new chief marketing officer, taking over from Jerri DeVard.

Interestingly, given Nokia's new push for location-based services, both Savander and McDowell were at some point in their lengthy Nokia careers on the board of navigation subsidiary Navteq.

Other new appointments include Juha Putkiranta as operations head, Susan Sheehan as communications chief, and Chris Weber as executive vice president of sales and marketing.