Not quite panic yet but Nokia is slowly getting there

Nokia today announced some additional measures to “align its workforce and operations”.

Espoo, Finland – Nokia today announced plans to take additional actions to align its workforce and operations. The measures support both the execution of the company’s strategy and the savings target the company announced earlier this year, and also target to bring efficiencies and speed to the organization.

Earlier this year, Nokia announced changes primarily focused on aligning its R&D operations in Smart Devices and Mobile Phones. Today, the company announced the next phase of operational alignment, which includes plans for reductions in manufacturing, the Location & Commerce business, and supporting functions.

About 3500 employees impacted and several production sites will be under review. At the end of June, they had almost 140k employees so this is still approximately nothing.

The planned closure of the Cluj factory combined with adjustments to supply chain operations is estimated to impact approximately 2,200 employees. The planned changes in the Location & Commerce business are estimated to impact approximately 1,300 employees. These personnel reductions are in addition to the measures announced in April and are expected to take effect by the end of 2012.

This is what Elop had to say:

We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger. We must take painful, yet necessary, steps to align our workforce and operations with our path forward.

Back in May when Nokia issued a profit warning, I penned the following:


A month ago Nokia announced its restructuring plan including outsourcing Symbian workforce to Accenture and reducing personnel by additional 4000. They also said they would decrease their Devices & Services non-IFRS operating costs by 1 billion euros by 2013 compared to 2010. The plan itself had few big problems, but given that it took less than 2 months for the shit to hit the fan for Nokia, I am now expecting additional restructuring program to be announced before the end of the year possibly in a panic atmosphere, but that really depends on what happens with the market shares of Symbian and especially WP7.

The cost structure is still pretty heavy for a firm in decline and I would not be surprised to see more alignment actions, especially so if Windows Phones don’t catch up as well as they think.

Next up, Nokia will announce 3rd quarter results on 20th October and they will have this year’s Nokia World on the 26th where they are expected to show some WP Mango handsets.

The Nokia N9 will start shipping in couple of weeks, but it is rather irrelevant as Nokia has seemingly been doing everything to destroy its success. The WP handsets will presumably start shipping in early November at the earliest, but Nokia has had a track record of missing launches.

Quite a few new WP devices have already been announced by other manufacturers that have already had MS products on sale and have good carriers relations so Nokia is going to have a tough time meeting goals.

Even if we take a rather optimistic scenario where MS captures 10 per cent of smartphone market on the 4th quarter and Nokia somehow gets half of that, their outlook is none too bright, because higher-end Symbian handsets are in the gutter even with significant discounts to launch prices.


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