Nokia has announced 10,000 more job cuts and several high-profile executive departures – fuelled by disappointing expectations for the current quarter – as well as the sale of its “luxury mobile phone unit” Vertu to private equity firm EQT VI.
The ailing Finnish giant said it is planning to improve its position by “significantly” reducing its Devices & Services operating expenses, “substantially” cutting its headcount, and trimming its factory footprint.
Stephen Elop, its president and CEO, said: “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.”
The company now expects non-IFRS operating margin in its Devices & Services unit for the second quarter of 2012 to be “below the first quarter level of negative 3 percent,” revised from previous guidance of “similar to or below” its first quarter performance.
In a statement, it said that as a result of the planned changes announced today, it will cut “up to 10,000 positions globally by the end of 2013.”
The company said it intends to reduce the non-IFRS operating costs in its Devices & Services unit to around EUR3 billion annually by the end of 2013, compared to EUR5.35 billion for full-year 2010. It had previously targeted a reduction of “more than EUR1 billion.”
It is anticipating further charges of around EUR1 billion related to its restructure by the end of 2013, in addition to the cumulative EUR900 million already seen.
Nokia is parting company with long-term senior executives Niklas Savander (EVP, Markets) and Mary McDowell (EVP, Mobile Phones), as well as Jerri DeVard, its CMO, who are departing “to pursue other opportunities outside of Nokia.”
The company has identified several potential growth areas for the future. In its Smart Device unit, it plans to “extend its strategy by broadening the price range of Lumia and continuing to differentiate with the Windows Phone platform, new materials, new technologies and location-based services.”
In addition to using its location-based platform as a way to differentiate its Lumia range, the company said it “plans to extend its mapping technology to multiple industries to strengthen the platform and generate new revenue.”
In its mass market Mobile Phones unit, it intends to “further develop its Series 40 and Series 30 devices, and invest in key feature phone technologies like the Nokia Browser, aiming to be the world's most data efficient mobile browser.”
The company has also announced it intends to acquire “world-class imaging specialists as well as technologies and intellectual property” from Swedish company Scalado. The pair have worked together for more than ten years, with Jo Harlow, EVP of Smart Devices at Nokia, stating that “they’ve contributed to many of our leading imaging applications.”
The company said in its statement that it will make “reductions related to non-core assets, including possible divestments.”
Nokia confirmed the anticipated sale of its “luxury mobile phone unit” Vertu to private equity firm EQT VI, without confirming how much it has received – previous reports suggest a figure of up to EUR200 million. The transaction, which is expected to close in the second half of this year, will also see Nokia retaining a 10 percent stake in the business.