Nokia echoes Ericsson’s macro gloom and plans to cut up to 14,000 jobs

Finnish kit vendor Nokia cited a challenging market environment as the main reason it intends to cut thousands of jobs over the next few years.

The announcement coincided with Nokia’s latest quarterly numbers, which made appropriately grim reading. Sales were down 15% year-on-year, with margins also headed in the wrong direction. The main culprit seems to be mobile customers in North America, but the one bright spot in India seems to be dimming and the fixed-line Network Infrastructure division isn’t doing great either.

“In the third quarter we saw an increased impact on our business from the macroeconomic challenges that are pressuring operator spending, resulting in a 15% net sales decline in constant currency compared to the prior year,” said Nokia CEO Pekka Lundmark in his remarks accompanying the quarterly numbers.

“Network Infrastructure declined 14% due to weaker spending impacting IP Networks while Fixed Networks was impacted by the same challenge combined with customer inventory digestion. In Mobile Networks net sales declined 19% as 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. Cloud and Network Services proved more robust in the quarter with a 2% decline and continued to benefit from strong growth in the Enterprise Solutions business.

“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.”

For all Nokia’s attempts to put a positive spin on the numbers and outlook, actions speak louder then words. The headline news is the announcement that Nokia intends to cut 9,000-14,000 jobs between now and the end of 2026, in a bid to save up to €1.2 million in annual costs. The company is also doing some organisational tweaks largely around how the salesforce is allocated, which may offer a clue about where many of those job cuts will come from, especially since we’re told that R&D is ring-fenced.

At time of writing, Nokia’s shares were down 3% on the news, but they had already taken a hit from Ericsson’s similarly gloomy earnings two days ago and are down more like 6% for the week. That drop may well have been steeper if it wasn’t for the cost-cutting announcement, a decision it’s hard to argue with when you consider the adjustments Nokia has made to its total available market assumptions.

Here’s a video of Lundmark summarising today’s announcements.

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