Nokia, has announced a series of measures aimed at bringing better business focus, ensuring operational efficiencies and getting back to profitability. It has also announced the revamp of its leadership team. As a result of the planned changes announced today, Nokia plans to reduce up to 10,000 positions globally by the end of 2013.
Towards getting to its renewed strategy Nokia plans to:
– Invest strongly in products and experiences that make Lumia smartphones stand out and available to more consumers;
– Invest in location-based services as an area of competitive differentiation for Nokia products and extend its location-based platform to new industries; and
– Improve the competitiveness and profitability of its feature phone business.
Some proposed actions, including the actions that may lead to sizable job cuts and closure of its facilities.
- Nokia is making changes to its management team by tapping into the strong leadership bench at the company
- To support this period of transition, Nokia intends to improve its operating model by significantly reducing its Device & Services operating expenses, substantially reducing its headcount and reducing its factory footprint.
"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."
Operational changes and updated cost reduction target
Balancing its investment priorities, Nokia plans to rescale the company by making additional reductions in Devices & Services. Nokia plans to pursue a range of planned measures including:
– Reductions within certain research and development projects, resulting in the planned closure of its facilities in Ulm, Germany and Burnaby, Canada;
– Consolidation of certain manufacturing operations, resulting in the planned closure of its manufacturing facility in Salo, Finland. Research and Development efforts in Salo to continue;
– Focusing of marketing and sales activities, including prioritizing key markets;
– Streamlining of IT, corporate and support functions; and
– Reductions related to non-core assets, including possible divestments.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength," added Elop. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."
As part of these planned changes, Nokia will closely assess the future of certain non-core assets. In line with this, Nokia today announced plans to divest Vertu, its luxury mobile phones business to EQT VI, a European private equity firm.
Source: Nokia Stock exchange release