Nokia needs to create a structure that can support its ambitions, says Elop.
Published Thursday, 14 June 2012
By Mark Sutton
Nokia has announced that it is "sharpening" its return-to-growth strategy, with a move that will cut 10,000 jobs and shed a number of non-core business activities.
The wide-ranging restructure is intended to focus on improving the appeal of its Lumia smartphone line up, developing more technology features to stand out from competition, reduce the OPEX of its Device & Services business, and return its regular handset business to profitability.
The move will mean 10,000 job cuts, which will bring the total number of job losses at Nokia to 40,000 since September 2010. A number of senior executives will also step down from the start of next month, and the company will close R&D facilities in Germany and Canada, and manufacturing facilities in Salo, Finland.
The Vertu luxury mobile phones business will be sold to EQT VI, a European private equity firm. The company will also consider its options for other non-core business units.
Nokia expects additional costs of approximately EUR 1.6 billion ($2bn) of additional cost reductions by the end of 2013.
In product terms, Nokia says it will invest more in making the Lumia range of Windows-based phones more attractive, by developing its features and the end-user experience. It will also broaden the price range of the Lumia line up. The company says it will differentiate with the Windows Phone platform, new materials, new technologies and location-based services. Location-based services was singled out as an area of Nokia's expertise that it intends to capitalise on.
As part of this drive, Nokia announced the acquisition of assets from mobile imaging company Scalado, which currently has imaging technology on more than 1 billion devices.
The company also intends to improve the competitiveness and profitability of its feature phone business.
Stephen Elop, Nokia president and CEO. "We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia.
"We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength. We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."
Nokia also announced a number of changes at the executive level. Jerri DeVard, executive vice president and chief marketing officer; Mary McDowell, executive vice president of Mobile Phones; and Niklas Savander, executive vice president of Markets are all out, while Juha Putkiranta becomes executive vice president of operations; Timo Toikkanen becomes executive vice president of Mobile Phones, Chris Weber takes on the role of executive vice president of sales and marketing; Tuula Rytila is appointed senior vice president and chief marketing officer; and Susan Sheehan becomes senior vice president of communications.