Wednesday, June 13, 2012

Nokia Lowers Outlook and Cuts Back

Citing strong competitive pressure in smartphones, Nokia lowered its outlook for mobile device sales in Q2 and announced a number of organizational changes including reducing the number of employees by 10,000 by the end of next year as well as reducing its manufacturing capacity. The cutbacks include closure of its research facilities in Ulm, Germany and Burnaby, Canada and the closure of its manufacturing facility in Salo, Finland.

Nokia said its strategy centers on:

  • Invest strongly in products and experiences that make Lumia smartphones stand out and available to more consumers;

  • Invest in location-based services as an area of competitive differentiation for Nokia products and extend its location-based platform to new industries; and

  • Improve the competitiveness and profitability of its feature phone business.

"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," said Stephen Elop, Nokia president and CEO. "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."

In addition, Nokia appointed Juha Putkiranta as executive vice president of Operations; Timo Toikkanen as executive vice president of Mobile Phones; Chris Weber as executive vice president of Sales and Marketing; Tuula Rytila as senior vice president of Marketing and Chief Marketing Officer; and Susan Sheehan as senior vice president of Communications. Jerri DeVard steps down as chief marketing officer; Mary McDowell steps down as executive vice president of Mobile Phones; and Niklas Savander steps down as executive vice president of Markets. DeVard, McDowell and Savander will all continue in advisory roles through the transition of their roles; however, they step down from the Nokia Leadership Team effective June 30, 2012.

"Nokia is significantly increasing its cost reduction target for Devices & Services in support of the streamlined strategy announced today," said Timo Ihamuotila, executive vice president and CFO. "With these planned actions, we believe our Devices & Services business has a clear path to profitability. Nokia intends to maintain its strong financial position while proceeding aggressively with actions aimed at creating shareholder value."

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