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Nokia to axe 7,000 jobs in bid to cut costs
Finnish firm to outsource its Symbian software development unit as it struggles to compete in smartphone market.
Last Modified: 27 Apr 2011 22:07
Elop said it was possible the first Nokia phone running on Windows software could reach customers this year [EPA]

Nokia is to axe 7,000 jobs and outsource its Symbian software development unit in order to cut $1.46bn in costs as it struggles to compete in the smartphone market.

The world's largest phone maker by volume detailed the overhaul of its phone business on Wednesday following its decision to start using Microsoft software instead of its own Symbian platform.

The move includes laying off 4,000 staff and transferring another 3,000 to services firm Accenture, a total of 12 per cent of its phone unit workforce.

Accenture will take over Nokia's Symbian software activities and will become a primary software partner for future smartphones running on Microsoft's Windows platform.

In New York, Nokia shares were up 4.3 per cent following the announcement, while Accenture was 0.3 per cent firmer.

Stephen Elop, Nokia's chief executive, told Finnish national broadcaster YLE it was possible the first Nokia phone running on Windows software could reach customers this year.

Nokia's market share in smartphones has fallen sharply over the past few years as it loses out to Apple and other manufacturers of high-end handsets.

"The competitive environment has changed rapidly," Elop told a news conference in Helsinki, while outlining which parts of its operations will be hit the most.

Nokia said most of the 4,000 layoffs will take place in Finland, Denmark and Britain, with all workers staying on the payroll through 2011.

"This is about keeping focus within Nokia on Windows Phone. It helps to get rid of any doubts on where this company is going," said Carolina Milanesi, an analyst at Gartner, a US information technology research and advisory company.

Accenture said the deal gives it additional scale in the mobile industry, putting it "at the heart of" Nokia and Microsoft which are developing the third major mobile platform in addition to Google and Apple.

The deal does not include Symbian software code.

The job cuts and site closings will let Nokia cut annual business research and development costs by $1.46bn, or 18 per cent, by 2013 from $8.3bn in 2010, the company said.

"Restructuring had been widely expected, but Nokia will be hoping that the transfer of 3,000 of jobs to Accenture will help cushion the blow as it ramps down its Symbian investments," said Ben Wood, head of research at CCS Insight, a UK-based company which provides analysis of the mobile sector.

Non-Finn

Nokia hired Elop from Microsoft last year to replace Olli-Pekka Kallasvuo in a bid to compete more effectively in the smartphone market.

The Canadian is the first non-Finn to run the company, which evolved from a rubber boots-to-TVs conglomerate into a global mobile phone maker in the 1990s.

In its native Finland, Nokia will cut 1,400 jobs.

"This went slightly better than expected because Nokia transfers Symbian development. These 1,400 people ... should have quite good chances to find new jobs," said Pertti Porokari, chairman of the Union of Professional Engineers in Finland.

Nokia said it would wind down its large operations in Copenhagen, cutting 950 jobs there, and close its second headquarters in White Plains, New York.

The move crushed Finnish media speculations of Nokia planning to move its headquarters to the US.

"Finland absolutely remains in the heart of Nokia's future," Elop said.

Job cuts at Finland's flagship company are a blow to confidence in the country, already struggling with unemployment of around 8 per cent.

Worries about jobs and possible cuts to social welfare helped the populist True Finns party in the country's general election earlier this month.

Nokia's telecom gear arm, Nokia Siemens Networks, cut about 9,000 jobs after it started operations in 2007.

Source:
Agencies
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