Nokia plans over 14,000 job cuts as profit drops for third quarter

Finnish telecom major Nokia expects to cut up to 14,000 jobs as it posted a decline in earnings for the third quarter of 2023 on Thursday.
The new cost reduction programme is designed to lower the cost base by €800 million ($843 million) to 1.2 billion euros on a gross basis over a three year period. This represents a 10 to 15% reduction in personnel expenses.
The cost savings are expected to primarily be achieved in Mobile Networks, Cloud and Network Services and Nokia's corporate functions.
Nokia sees at least €400 million of in-year savings in 2024 and a further €300 million in 2025. The programme is expected to lead to a 72,000 to 77,000 employee organization compared to the 86,000 employees Nokia has at present.
The company said the exact scale of the programme will depend on the evolution of end-market demand. The programme is expected to deliver savings on a net basis but the magnitude will depend on inflation.
The company, once the world's top mobile phone maker before Apple and Samsung took over, also reiterated its long-term comparable operating margin target of at least 14% to be delivered by 2026.
A fall in revenue is being blamed on the increased impact of macroeconomic challenges that were pressuring operator spending.
For the three-month period to September, Nokia posted a profit of €133 million ($140 million) or €0.02 per share, less than the €428 million or €0.08 per share recorded for the same period last year.
On a comparable basis, profit stood at €299 million or €0.05 per share against last year's €551 million or €0.10 per share.
Operating income dropped to €241 million from €518 million in 2022.
Comparable operating income was down €424 million compared to €658 million recorded over the same period last year.
Net sales moved down to €4.982 billion from 6.241 billion a year ago.
Commenting on the dividend, the company said: "Under the authorization by the Annual General Meeting held on 4 April 2023, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.12 per share to be paid in respect of financial year 2022."
Looking ahead to the full 2023 year, the telecom company expects net sales of €23.2 billion to €24.6 billion with comparable operating margin of 11.5% to 13%.