Nokia Cuts 10,000 Jobs
In an effort to stay afloat during troubling times, Nokia (NYSE: NOK) has decided to not only cut 10,000 more employees from its workforce, but will soon undergo a managerial restructuring following yet another earnings cut. Turmoil is nothing new for the telecommunications company as of late, as it has experienced increased competition in recent years that has left service down and out.
Additional job cuts made by Nokia can be chalked up to operating losses and smartphone sales letdowns. The company, which has already cut 14,000 jobs in the past year alone, expects cost savings to reach around 2 billion USD following lay-off implementation by the end of 2012.
The loss of thousands of more workers is not something the Finnish wireless distributor is taking lightly. Management will not only replace three company executives by the end of June, but has vowed to increase its dedication to customer needs.
“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,” said Stephen Elop, Nokia president and CEO.
“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. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”
One thing is for sure; Nokia needs to reorganize its business model in order to keep investors at bay. Unnerved traders and analysts are beginning to lose complete faith in a company turnaround, as product success is desperately needed and not being delivered.
According to J.P. Morgan, Nokia is taking the right steps by becoming a smaller business before dreams of expansion get in the way. Exiting certain markets and honing in on others may be just the ticket for the company to recapture the success it once had, but they must spend in order to save while making bold moves over the next few months.
Management also lowered expectations for the fiscal year this morning, stating that restructuring-related cash outflows will be about 5.6 million by the end of 2012's first quarter, with the second quarter to reach 8.1 million and remain around 7.5 million heading into 2013.
While high-stress times have become the norm for Nokia in recent months, some research firms are still holding out hope on the troubled company. With an executive restructuring underway and yet another downsize, Nokia may be able to finally focus on its customer's needs and categories of the wireless market where it typically experiences success.
NOK closed yesterday at $2.79, down 9.5 percent in pre-market trading Thursday morning.
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