Nokia cuts 10K jobs, reshuffles leadership team

Phonemaker plans to reduce headcount to return Devices & Services arm into profitability, while investing in its Lumia smartphones and location-based services. It also sells Vertu to an European equity firm.
Written by Kevin Kwang, Contributor on

Nokia is undergoing another round of internal job cuts and executive reshuffling in an effort to improve its operating model and returning the Finnish phonemaker to profitable growth, the company stated.

According to a statement issued on Thursday, the company said it plans to significantly reduce its operating expenses while investing in making its Lumia smartphones "stand out and be available to more consumers". It also plans to invest in location-based services (LBS) as a competitive differentiator while enhancing the competitiveness and profitability of its feature phone business.

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

"However, we must reshape our operating model and ensure that we create a structure that can support our competitive ambitions."

To achieve these goals, the phonemaker announced plans to rescale the company and make additional reductions in its Devices & Services department, which would eventually result in some 10,000 positions globally to be cut by 2013.

Additionally, there will the curtailing of certain research and development projects that would lead to the closing of its facilities in Germany and Canada, while consolidation of manufacturing operations will mean the closing of its plant in Salo, Finland.

The streamlining exercise will help Nokia achieve its goal of reducing its Devices & Services operating expenses to an annual 3 billion euros (US$3.8 billion) by end-2013, which is an update on the previously stated target of cutting more than 1 billion euros (US$1.3 billion) for the same timeframe. The 2010 operating expenses for this department was 5.35 billion euros (US$6.7 billion), it stated.

Last September, the company announced it will cut 3,500 jobs in Germany, Romania and the United States by end-2012, as well as shuttering a plant in Cluj, Romania. It was also said to be reviewing decisions to close factories in Finland, Hungary and Mexico.

Investing in imaging, LBS
The company will not just be cutting costs though. Nokia stated that it plans to broaden the price range of its Windows Phone-based Lumia smartphones and introduce new technologies and location-based services to differentiate its products.

In line with this plan, it announced the acquisition of assets from Sweden-based Scalado to strengthen its imaging tech although no financial details were revealed. Scalado offers mobile imaging technology and its products are used by leading telecom and platform players in over 1 billion mobile devices, according to its Web site.

The phonemaker also plans to improve its LBS services on Lumia devices, particularly in the area of navigation and visual search applications. It will also extend its mapping tech to multiple industries to "strengthen the platform and generate new revenue", according to the statement.

It will also divest its non-core assets, starting with Vertu, its luxury mobile phone business. European private equity group EQT VI has agreed terms with Nokia to acquire Vertu, which has delivered "double digit sales growth over the past four years", but no financial details were revealed.

Leadership changes
At the management level, Nokia also announced that it will be making changes and tap on its "strong leadership bench" to help lead the company toward its stated goals.

Chief Marketing Officer (CMO) Jerri DeVard, executive vice president of mobile phones Mary McDowell, and executive vice president of markets Niklas Savander have all stepped down from their positions. They will continue in advisory roles during the transition of their positions but will make way from the leadership team effective Jun. 30, 2012.

In their place will be Juha Putkiranta as executive vice president of operations, Timo Toikkanen as executive vice president of mobile phones, Chris Weber as executive vice president of sales and marketing, Tuula Rytila as senior vice president of marketing and CMO, and Susan Sheehan as senior vice president of communications.

Putkiranta, Toikkanen and Weber will also join the leadership team effective Jul. 1, 2012, it stated.

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