Nokia To Cut 10,000 Jobs and Close 3 Facilities

parallel_prankster writes "NY Times reports that Nokia said on Thursday it would slash 10,000 jobs, or 19 percent of its work force, by the end of 2013 as part of an emergency overhaul that includes closing research centers and a factory in Germany, Canada and Finland, and the departures of three senior executives. The company also warned investors its loss was likely to be greater in the second quarter, which ends June 30, than it was in the first, and that the negative effects of its transition to a Windows-based smartphone business would continue into the third quarter. Nokia, based in Espoo, Finland, posted a loss of €929 million, or $1.2 billion, in the first quarter as sales plummeted 29 percent. Once the undisputed global leader in the mobile phone business, Nokia has been outcompeted by Apple, as well as by Samsung and other makers of handsets running Google's Android operating system." (Here's another source, if you're hit by the NYT paywall, and the company's own positive spin.)

Comments

No good news in that

[crazyjj]

A lot of Apple fans and MS haters may be tempted to cheer, but the loss of 10,000 jobs in this economy means 10,000 families whose lives will been up-ended and that sucks no matter what phone you're rooting for.

And what's more, according to the article, a third of these job losses will come from Finland, with more in Germany and Canada. Decent western factory jobs seem to be going the way of the Dodo bird. Are there any phones still actually being manufactured in the first world? Even if Nokia recovers, what are the odds that those jobs won't reappear in Finland, but in China?

Re:No good news in that

[Nursie]

Cheer?

I can hate on MS as much as the next guy, but this is sad whatever way you spin it. Nokia used to create great products and be a byword for quality, reliable, cutting edge phones.
Then they lost their way, management started all sorts of retarded internal competition games and the company just started chucking out hundreds of near identical handsets.

Even then they had a significant market lead, even in the smartphone sphere, but they were losing it. This is when Elop came along and really killed them, jumping straight into bed with his old bosses and sealing the fate of a once-great european tech powerhouse.

It's a shame to see such an icon driven into the ground.

Re:No good news in that

[IAmR007]

Windows phones was definitely the wrong way to go. Getting Qt working well on Android and iOS and marketing it as a platform could have been a lot more successful. Being able to use the same core code on multiple platforms is a big advantage. Instead, they chose a dying mobile OS.

Re:No good news in that

[localman57]

The good thing about this will be that eventually all socialism will end....

No it wont. Because some socialism is good. Public schools are good. Public roads are good. Public health initiatives are good. You have some socialist countries now that are highly uncompetitive. And you have highly capitalist countries, such as China, which are highly competitive, but creating externalities that make their current path unsustainable. Somewhere in the middle, a resonably free enterprise system with some government sponsored investment and a public safety net is where you're going to get the best overal quality of life over the span of decades.

Re:No good news in that

[plover]

It may have been obvious, but it was obvious long before Microsoft had anything to do with it, and this certainly isn't Microsoft's fault. Remember the Burning Memo? Nokia has been faltering ever since the Chinese factories have been able to create their own lines because of the cell phone chipset availability.

Nokia took the Microsoft deal because it became evident to them that Nokia's own OS was no longer a selling point, so it didn't make sense to further invest in it. That saved them a few kroner in the short term, plus there was a longshot chance that Windows Phone 8 could have made a dent in the market. It obviously hasn't yet, nor did the tech community expect much different, but one never knows what the phone market will look like in five years.

Re:No good news in that

[crazyjj]

why would i want my kids to aspire to this kind of work?

If you went to public school, remember all the "slow" kids, and all the others who clearly weren't cut out for college? Well, those kids are adults now and they need jobs just like you do.

Re:No good news in that

[Asic Eng]

assembling a phone is the equivalent of playing with Lego's. its simple tedious work. why would i want my kids to aspire to this kind of work?

They are not just closing plants according to this.

From the bloomberg article: "The biggest share of cuts will come in research and development, where Nokia is killing whole projects to preserve others that are more important, Chief Financial Officer Timo Ihamuotila said on a call. Sales is the second-biggest area affected and general overhead is third, he said."

So they are now at the stage where they have to stop developing tomorrow's products in order to pay today's bills.

Re:No good news in that

[Anonymous Coward]

They could easily choose a different strategy and save the company. E.g. they could become OS-agnostic, just like Samsung: produce N9-like phone in both Maemo, Android and WP7 version, and see what sells best. I'm 100% sure lots of people would buy Android version of this phone because of the great looks and mature OS.
Killing Symbian too early, killing Maemo right after it was finally ready to sell and going to WP7 only was the most stupid decision ever.

I hope they eventually going to realize it and give that infiltrator from Microsoft the treatment he deserves.

Re:No good news in that

[Daniel Dvorkin]

Too many people are arguing pro-Finish type of socialism, but that's why Finland is going to lose more and more jobs.

This argument would be a lot more convincing if the economies of more capitalist countries were booming. In case you hadn't noticed, they're not.

Re:No good news in that

[Anonymous Coward]

I really hate the whole capitalist / socialist debate because the whole thing is stupid like localman57 hinted at. The problem with any ideological system is that they try to reduce people to simple, consistent groups. But people are not simple and they are not consistent. Anyone who has ever mowed their neighbor's law because their mower was broke, or they were sick is a socialist. Anyone who has ever bought an overpriced candy bar to support some annoying kids program is a socialist. Anyone who has ever bought an oreo over value brand because they taste better and the cost is worth it is a capitalist. So is anyone who has ever bought the value brand because oreos are too damn expensive and not worth it.

People are all socialists because we come from families, villages and towns that support each other. We are also capitalists because we're all selfish and want to get as much as we can for the work we do. Anyone who claims that one or the other is the only true way is either a fool, or lying in order to manipulate other fools,

Re:No good news in that

[localman57]

There's not a good description for what China is. I use the term "caplitalist" with regard to the externalities (pushing your costs off on society) with regard to how they do business. Being able to dump heavy metals directly into the local river, for example, makes you competitive against companies that operate with more restricitons. China has been described as a lawless country with lots of laws on the books. Ability to do business outside of law is very free-market.

But, you're right. There are still large aspects of state run economics, particularly in the banking sector.

Re:No good news in that

[Penguinisto]

They brought it on themselves, and have only themselves to blame.

In all seriousness, Nokia sat around on its ass all smug and secure for way too long after the iPhone detonated, then redefined the market. Samsung, HTC, and many others busted ass to remake themselves and their products into credible contenders. Nokia sat around and watched their R&D flounder around, thinking they had all the time in the world to do something about it, all while pointing at Symbian's (then) massive dominance of the global smartphone markets. They then had a chance to make a clean break and start fresh, but they decided to back the wrong horse (with a nudge from their new Microsoftie CEO, natch).

Moral of the story? Apparently it's two-fold:
1) If you're on top, don't sit around on your ass all complacent about it.
2) Never hire anyone who has previously worked as a Microsoft executive. They *will* fuck you over.

Re:No good news in that

[k(wi)r(kipedia)]

How is China capitalist? It is certainly more capitalist than it was 10 years ago, but its level of central planning is comparable to European countries.

Central planning isn't incompatible with capitalism. Nazi Germany was capitalist and fascist. Private citizens were free to make money so long as they belonged to the privileged race and had the right connections. So okay, it's a form of "crony" capitalism but it's capitalism nonetheless.

Re:No good news in that

[Nemyst]

A fan is not a rational being. It is a marketing construct made through intensive brainwashing of already impressionable human beings and turned into a buzzword spewing machine. Its sole purpose is to promote the company's products while dissing competitors'.

Re:No good news in that

[Wansu]

  Then they lost their way, management started all sorts of retarded internal competition games ...

Bad management is why most of the high paying jobs have disappeared over the last several decades, due either to incompetence, crookedness or a combination of the two. Nokia is just the latest in a long line of mismanaged companies going belly up.

Re:No good news in that

[Tough Love]

The MS deal didn't really have anything to do with it

Oh which planet? Note: NOK dropped 20% the day the Microsoft sellout was announced. Burning platforms indeed.

Re:No good news in that

[plover]

They could go Android, sure, but Android phones are almost commodity phones, where the handset manufacturer isn't adding enough value to make them differentiators. That means as a customer, I could pick up an LG or HTC or Motorola or Samsung and get a pretty similar phone. And that means they all compete on price. That puts the Nokia phones up against the manufacturing might of China, which means that margins would start out razor thin and fade quickly to non-existent.

Symbian appealed to a hundred thousand early-adopter phone geeks, but they were not getting any mass market share from the first-time smartphone buyers, who were heading straight to Android or iPhone (depending primarily on the contents of their wallets.) Maemo would have cannibalized that market, but would not have taken any buyers away from the two big players. The WP7 deal came with the backing of Microsoft, which provided a lot more marketing clout than Nokia is capable of delivering these days.

When you're trying to compete, it's best to have a differentiator that people will actually pay for. Symbian was no longer it, and Maemo would never have been it. They bet that WP7 might have been it. It's not looking great so far, but Microsoft is a lot better backed than anyone else courting Nokia.

Re:No good news in that

[Tough Love]

Getting Qt working well on Android and iOS and marketing it as a platform could have been a lot more successful.

They can still do that if they fire Elop. And they can start with vanilla Android to tide them over through the QA period. Getting QT up on Android would take what? Two weeks for somebody who knows what they're doing?

Re:No good news in that

[s73v3r]

They could go Android, sure, but Android phones are almost commodity phones, where the handset manufacturer isn't adding enough value to make them differentiators.

You know, everyone says this, and while I'm not going to argue it's not true, I will point out that Android phones are actually selling, as opposed to Windows Phones. A differentiator only matters if it can actually sell.

Re:No good news in that

[Flipao]

Wait, Google buys Nokia and fires Elop. No, Facebook buys Nokia and fires Elop. No, Ebay buys Nokia and fires Elop.

Or Microsoft buys Nokia and gives Elop a bonus.

An award to Stephen Elop..

[GhostIdentity]

Stephen Elop - The Trojan Horse of modern era.

Re:An award to Stephen Elop..

[oh_my_080980980]

I know Microsoft has alot of apologists but this is amazing.

Investors did not agree with the deal and the chickens are coming home to roost. EVERYONE knew the deal was bad.

1. No Windows phone for ONE YEAR. No product in one year is a lifetime in the smartphone market. 2. Killed off Symbian. Their existing lines of phones were selling. Their customer base starting jumping ship since those phones were being killed off for Windows phones that were yet to be seen.

Every analyst knew the timeline was extremely bad for Nokia. Nokia could have survived had they not made the deal and worked on their own products.

Typical

[JustAnotherIdiot]

CEO and board members make a bad decision, the workers at the bottom end up paying for it.
Best of luck to those being let go.

Re:So what is your utopian alternative?

[SgtChaireBourne]

They're also getting rid of those popular low cost phones that have been selling in Africa and India. Elop is killing all possible ways to save Nokia and is actively ruining the company. Other analysts don't see Nokia returning to profitability devices in the foreseeable future either this year or next. There's nothing left to save. The pre-Microsoft Nokia is already dead and gone. There's nothing to rejoice about, it's just a fact.

A brilliant mix of capitalism and socialism,...

[Anonymous Coward]

In our quest for purity, we are asked to don a red or a blue cap which is supposed to align to socialist-leaning (blue) against capitalist-leaning (red) doctrines, but of late, not combine the two. Its time to realize that any successful society will need to embrace elements of both socialism and capitalism to be remain sovereign. Get that Mitt? Get that Barack?

Shareholders should sue Elop

[JDG1980]

Stephen Elop's decisions as Nokia CEO indicate that he is placing the well-being of another company (Microsoft) over the well-being of the company he's supposed to represent. The result is the $1.2 billion quarterly loss mentioned in the original post. This loss is, in large part, a result of Elop's breach of his fiduciary duty to Nokia. Why haven't the shareholders sued him?

Re:So what is your utopian alternative?

[oxdas]

Money is money. If the phones are profitable, then continue to pursue them while you move in another direction. Consider Samsung, they are the smartphone leader right now, shipping 38 million smartphones last quarter (compared to Apple's 31 million). They also shipped 48 million dumb phones during the same period. I don't hear anything from them about dumping their dumb phone business. It goes to show that you can be both a smart and dumb phone company.

This reminds me very much of the recent HP shortsightedness with their low margin computer business.

Re:So what is your utopian alternative?

[Tough Love]

It is now abundantly clear that Nokia needed to get on board with Android. Sure, they would likely end up with less than a majority share but their name recognition, distribution network, engineering and let's admit it, build quality, would ensure a solid, respectable share. Better than nothing, which is what they will have if they don't fire Elop.

Re:Nokia's death spiral continues

[Tough Love]

Elop has set a world record in management failure.

Management failure? How about criminal malfeasance.