Facing business downturn, Nokia reluctantly lays off over 14,000 employees.

On October 19th, in its latest announcement, the world-leading telecommunications company - Nokia, unveiled plans to cut between 9,000 to 14,000 personnel due to declining revenue and reduced demand for 5G devices. This comes amidst a volatile and challenging market environment.

Currently, Nokia has around 86,000 employees worldwide and this decision to downsize is part of a cost-cutting strategy. Specifically, Nokia aims to save an additional 400 million euros by 2024, 300 million euros by 2025, and up to 1.2 billion euros by 2026. This translates to a reduction in the number of employees to around 72,000 to 77,000.

Nokia's CEO - Pekka Lundmark, revealed that the company's net sales in Q3 2023 reached 4.9 billion euros, a 15% decrease compared to the same period last year. The company's profit during this period also decreased by 424 million euros, which is a 36% drop compared to the same period. Lundmark stated that to adapt to market fluctuations and ensure long-term competitiveness and profitability, the company will focus on streamlining basic costs and increasing operational efficiency.

However, the decision to downsize the workforce is a challenging process, especially with the company's many talented employees. Lundmark also pledged that Nokia will support affected employees in the upcoming layoffs. The company is seeking ways to minimize the negative impact on its workforce. Nokia's decrease in business sales is assessed as a consequence of slow 5G growth in India and a decline in the North American market.

As a result, Nokia has adjusted its expectations for the overall mobile network market in 2023, expecting a 9% decline instead of the initially predicted 2%. In a recent announcement, Nokia's competitor Ericsson also reported Q3 business results with declines, particularly in the North American market. It seems the entire telecommunications industry is facing significant challenges and transformations in their business environments.

Furthermore, not only the mobile network sector but also other areas of Nokia have experienced decline. Revenue from mobile devices has decreased by 12%, down to 1.8 billion euros, while revenue from fixed networks has decreased by 17%, only reaching 1.02 billion euros. Thus, the company must confront a series of challenges in maintaining and developing its business.

There are several main reasons leading to Nokia's recent sales decline. Firstly, there is a decrease in demand for 4G and 5G mobile networks in the North American market. This has created significant pressure on Nokia, as this market is one of the most important in the world.

Secondly, increasing competition from strong rivals like Ericsson has forced Nokia to face fierce competition. This competition is not only in terms of pricing but also in the ability to provide quality products and services.

Thirdly, delays in deploying 5G networks in some markets have resulted in a decline in Nokia's revenue. Despite heavy investment in this technology, deployment delays pose a challenge to the entire telecommunications industry.

To address the current situation, Nokia is focusing on emerging markets, where the demand for telecommunications services is increasing. These measures may help Nokia adapt and recover in the future, amidst a telecommunications market undergoing significant transformation and competition.

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