Nokia plans to cut jobs
Finish firm posted profit that missed analysts’ estimates
STOCKHOLM: Nokia Oyj said it will cut an unspecified number jobs as part of a pro
� gramme to save 700mil in costs after the Finnish maker of networks posted third-quarter operating profit that missed analysts’ estimates.
The results showed that the company has some way to go to fulfil chief executive officer Rajeev Suri’s promise of a sharp improvement in the second half of this year, and raised the bar for fourth-quarter performance because the company maintained fullyear targets.
Suri has urged investors to look beyond weak results in the past few quarters, saying that the situation should brighten as carriers, particularly in the US, start spending on faster fifth-generation networks.
To reach the targets, the CEO has set out for
�
2020, the company is now targeting 700mil in annualised savings by the end of that year.
�
The programme will cost 900mil and will include job cuts, though Nokia didn’t specify how many workers will have to go.
“Our industry is one where a constant focus on costs is essential,” Suri said. “Even if these actions are right for our business, we do not take them lightly given the expected impact on our employees.”
Nokia still sees an operating margin in its network business of 6% to 9% this year. To reach that target, it will rely on a increase in spending by US operators.
In the third quarter, the margin was 5%.
� Quarterly adjusted operating profit of 487mil missed the average analyst estimate of �
515.8mil.
Still, the result was an improvement compared to the first two quarters of 2018, and Nokia expects to accelerate in the last three months of the year.
“The first part of the year was miserable, the third quarter was a little better and the fourth quarter now needs to show considerable improvement,” Inderes analyst Mikael Rautanen said.
“Market expectations were pricing in a profit warning before the report for the networks unit, so there is some slight relief there.”
Nokia in 2016 completed an US$18bil acquisition of French rival Alcatel-Lucent to broaden its product portfolio and offer customers a more complete set of products and services.
After the merger, Suri pledged to lower
� annual operating costs by 1.2bil by reducing overlapping products, services and sales positions.
“The plan we are announcing today is the logical step to take as the completion of our Alcatel-Lucent-related cost saving program draws near,” Suri said. — Bloomberg sharp Our industry is one where a constant focus on costs is essential. — Bloomberg