Nokia is going to cut a lot of jobs, up to 14,000, because they didn’t make as much money in the last three months. They’re doing this to save money because the market is tough. According to the report.
They want to spend less money and make their work more efficient. By 2026, they want to spend 800 million to 1.2 billion euros less than they do now. This means they will have fewer employees, going from 86,000 to 72,000 to 77,000.
This big job cut happened because Nokia’s sales went down by 20% in the last three months, and their profit went down by 69%. Ericsson, another company like Nokia, also said they would cut jobs to save money. They plan to cut 8,500 jobs.
Problems in the Phone and Internet Business
Nokia, a big company in the telecommunications industry, is facing problems because the global economy is slowing down, and mobile operators are spending less on their infrastructure.
Nokia’s mobile networks business, which makes the most money for the company, had a 24% drop in sales compared to last year, and the profit for this part of the company went down by 64%.
The decline in sales happened mainly in North America. In India, which is an important market for Nokia, the number of products sold has slowed down as the new 5G technology becomes more normal. 5G is a faster kind of mobile internet, and Nokia is helping India with it.
This year, American companies like Verizon and AT&T have also been trying to save money by reducing their costs.
Nokia and Ericsson in the Telecommunications Industry
Nokia’s CEO, Pekka Lundmark, explained in a statement on Thursday that the decrease in their mobile networks revenue happened because 5G deployment in India slowed down, and this decrease couldn’t make up for the slowdown in North America.
However, the company still believes that for the whole year, they will make sales between 23.2 billion euros and 24.6 billion euros, just like they previously said.
Lundmark is confident in the important factors driving their business. He pointed out that data usage is still increasing, and 5G is not fully set up yet, with only about 25% done, excluding China. Networks need more investment for the advancements in cloud computing and artificial intelligence to happen.
Nokia’s financial results were revealed after Ericsson, a company from Sweden, shared its third-quarter results on Wednesday. Ericsson also had a drop in revenue and faced similar problems in North America.
The CEO of Ericsson, Borje Ekholm, said in a statement, that the ongoing uncertainties affecting their mobile networks business will likely continue until 2024. This uncertainty raises questions about whether companies making telecommunications equipment will be able to bounce back soon.
Nokia is cutting 14,000 jobs because they’re not making as much money, and Ericsson is having similar problems. This is because the economy is slow, and phone companies are spending less. Nokia’s CEO is hopeful about 5G and data growth, but there are still uncertainties.