(Helsinki) Finnish telecoms giant Nokia announced on Thursday that it would cut up to 14,000 jobs to cope with the slowdown in mobile infrastructure activity.
The equipment manufacturer must in particular face a slowdown in investments by operators in North America in 5G in an overall gloomy context for the technology giants.
“In the third quarter, we saw an increased impact of macroeconomic challenges on our business,” CEO Pekka Lundmark said in a statement.
Its cost reduction program “should lead to a workforce of 72,000-77,000 employees compared to Nokia’s 86,000 today,” the group said.
After the results were released, Nokia’s share price was stable at 3.25 euros around 3 a.m. ET on the Helsinki Stock Exchange.
The group’s savings program is expected to enable cost reductions of up to €1.2 billion by 2026, targeting in particular mobile networks, as well as cloud and network services.
Nokia expects “an improvement” in its network business “in the fourth quarter.”
“The hardest decisions to make are those that impact our people,” the CEO added.
At the same time, Nokia announced a 69% drop in third-quarter profits to 133 million euros ($140 million) compared to the previous year.
During the same quarter, the telecom equipment manufacturer, engaged in a battle for 5G networks with its Swedish rival Ericsson and the Chinese Huawei, saw its sales fall by 20% to 4.982 billion euros.
“We saw some slowdown in the pace of 5G deployment in India, meaning that growth there was no longer sufficient to offset the slowdown in North America,” the official added.
In network infrastructure, its sales fell 14% due to lower customer investments in IP networks, while sales in mobile networks contracted 19%.
“Earnings were much weaker than expected and the outlook is more uncertain. So it doesn’t look very good in the short term for Nokia,” Atte Riikola, an analyst at Inderes, told AFP.
He judges that “Nokia’s forecasts will fall dramatically” and believes that there is “a possibility of a warning on negative results”.
The largest telecoms equipment manufacturers are affected by the slowdown in the global 5G market.
Ericsson had in recent months warned of a slowdown in investments by their customers, mobile telephone operators, due to the global economic deterioration.
The Swedish group announced on Tuesday a 5% drop in turnover in the third quarter. He himself announced a plan to cut 8,500 jobs worldwide at the end of February.
Nokia and its competitors saw their profits soar during the COVID-19 pandemic, but are now having to scale back as the technology sector slows.
In the United States, tech giants Meta and Microsoft have announced plans to cut at least 10,000 workers each.
In January, e-commerce giant Amazon announced it would cut more than 18,000 jobs and Google’s parent company Alphabet announced it would cut around 12,000 jobs.