Espoo-based telecommunications giant Nokia Oyj (HE:NOKIA) announced on Thursday plans to cut up to 14,000 jobs in response to a decline in 5G infrastructure investment from US and European operators. The exact number of job cuts remains undisclosed, but this reduction could equate to a 10%-15% decrease in personnel costs.
The layoffs are part of a wider cost-cutting strategy aiming to save between €800 million ($843 million) and €1.2 billion ($1.26 billion) by 2026. This move comes as Nokia (NYSE:NOK)'s Q3 2023 interim report revealed a substantial net sales decline from €6.24 billion ($6.57 billion) to €4.98 billion ($5.24 billion), leading to an adjustment in their full-year sales guidance.
Following the second quarter, Nokia downgraded its full-year sales guidance to between €23.2 billion ($24.43 billion) and €24.6 billion ($25.9 billion), maintaining an operating margin of 11.5% to 13%. This is a decrease from the previous top end of the range at 14%, indicating a bleak outlook for the second half of the year.
Nokia's weak earnings have led CEO Pekka Lundmark to anticipate the lower end of their projected net sales for 2023. The company attributes the downturn to macroeconomic uncertainties and rising interest rates, which continue to exert pressure on operator spending.
Despite these challenges, Nokia aims to streamline its workforce from the current 86,000 employees down to an estimated 72,000-77,000 in order to achieve its long-term target of a 14% operating margin.
Rival company Ericsson (BS:ERICAs) also forecasted market weakness persisting into Q4 and beyond, reflecting broader industry concerns about the future of 5G investment.
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