Nokia to cut 1,800 jobs as net profit euro529 million

AP News
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Posted: Oct 21, 2010 9:34 AM
Nokia to cut 1,800 jobs as net profit euro529 million

Nokia Corp. is moving quickly to restructure its lagging smart phone business under new CEO Stephen Elop, announcing Thursday it will lay off 1,800 people even as third-quarter earnings bounced back from a year-ago loss.

The world's largest mobile phone maker reported third-quarter net profit of euro529 million ($733 million). The profit compares to a net loss of euro559 million in the third quarter last year.

Net sales in the quarter grew 5 percent to euro10.2 billion.

Nokia's profits were stronger than expected and its stock jumped 7 percent to euro8.25 ($11.44) in Helsinki.

The company said it was cutting jobs as it shakes up product development in its Symbian smart phone business as it struggles to cope with competition from Apple's iPhone, Research In Motion's Blackberry and Google' Inc.'s Android software. Nokia employs about 131,500 people, with 66,000 of those at its Nokia Siemens Networks joint venture.

Nokia said it will "accelerate its transformation and increase effectiveness ... including simplifying operations in product creation in Nokia's Symbian smart phones organization" as it struggles against rivals.

The iPhone has set the standard for smart phones for many design-conscious consumers, while Research In Motion Ltd.'s BlackBerrys have been the favorite of the corporate set. More recently, Google Inc.'s Android software has emerged as the choice for phone makers that want to challenge the iPhone.

Nokia's Symbian operating system is older than Apple's software and wasn't designed from the ground up for touch screen phones. Other manufacturers that used Symbian have mainly jumped ship to Android.

Elop, a Canadian who took Sept. 10 after veteran Olli-Pekka Kallasvuo left, is the first non-Finn to run the company.

The choice of a North American executive was largely seen as reflecting the increasing dominance of U.S. and Canadian companies in the evolution of the top end mobile phone business.

Nokia, once the bellwether of the device business, has disappointed markets that had expected something fresh and new from a company that once had the innovative edge.

Although Nokia last month unveiled its new flagship touch-screen N8 model, which has been generally well received, it was too late for the third quarter and the company has pinned its hopes on the last quarter for a pickup.

But it warned that it expects lower device sales in the fourth quarter, of between euro8.2 billion and euro8.7 billion.

Nokia also slightly revised up previous estimates saying that it now expects the global device market to grow more than 10 percent this year but cautioned that it will lose market share in the full year.

"Some of our most recent product launches illustrate that we have the talent, the capacity to innovate, and the resources necessary to lead through this period of disruption," Elop said.

"We will make both the strategic and operational improvements necessary to ensure that we continue to delight our customers and deliver superior financial results to our shareholders."

Nokia sold 110.4 million devices in the period, up 2 percent on the same period in 2009.

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