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Nokia Will Lay Off Thousands Of People During The 5G Transformation
- Oct 30, 2018 -

It is reported that as part of a major adjustment plan that Nokia is embarking on, that is, it will reduce the cost of nearly 800 million U.S. dollars in 2020. Nokia has announced that it will lay off thousands of people. Nokia CEO Rajeev Suri said that the number of specific layoffs has not yet been determined, but it will be "thousands of people."

Nokia said the layoffs will be carried out on a global scale, which is expected to reduce labor costs by $1.02 billion.

In a recent earnings conference call, Nokia revealed that although it has reached a 5G agreement with many operators, the company still needs to significantly reduce operating expenses. Nokia plans to achieve this by adding more automation systems, streamlining some of the processes and greatly reducing related support functions. Since the research and development will continue to be prioritized, the investment in traditional products has been stopped.

Net sales for the third quarter of 2018 were $6.27 billion, compared to $6.53 billion in the second quarter. Operating profit was $554 million, a 27% decrease from the $760 million in the same period last year. Nokia shares rose 2% to $5.37 per share.

In addition to cutting staff, Nokia also said it will reorganize and create a new enterprise-centric group that will be led by Kathrin Buvac, who is currently the chief strategy officer. She will report directly to Suri and will stay with the company's leadership team.

Nokia will also consolidate its 5G momentum by focusing its mobile network business on mobile radio products and moving its cloud core product line to the company's software group. This strategy will take effect on January 1, 2019.

Layoffs are becoming more common

This is not the first time Nokia has talked about layoffs. Last month, the company said it would lay off 500 people at the Naperville office in Illinois by the end of the year. In March of this year, due to cost-cutting measures, Nokia Finland cut 353 people.

Nokia is not the only company affected by the decline in sales. Its competitor Ericsson also implemented a cost saving plan in November 2014. Ericsson's goal is to achieve $1.1 billion in annual operating income, which has been achieved this year.