Nokia, a multinational telecommunications and consumer electronics company, on Thursday decided to cut off 14,000 jobs in response to a 20% sales decline during the third quarter. This is the cost-saving strategy Nokia has opted for, following the sluggish 5G equipment sales in markets like North America.
As reported by the news agency Reuters, the firm aims for cost savings betwixt 800 million to 1.2 billion euros by 2026 to achieve a minimum of 14% comparable long-term operating margin by the same year.
The company informed in a statement that the following program is estimated for Nokia to lead a total of 72,000-77,000 workers as compared to 86,000 employees working currently.
"Nokia expects to act quickly on the program with at least 400 million euros of in-year savings in 2024 and a further 300 million euros in 2025," said the company.
Comparable net sales declined from the previous year of 6.24 billion euros to 4.98 billion euros, falling short of the expected 5.67 billion euros, as per the LSEG survey.
"While our third-quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter," said Chief Executive Mr. Pekka Lundmark.
Nokia will opt to be a slimmer corporate center, while providing guidelines and strategic oversight to protect outlay for research and development. Also, it will provide its business units with higher autonomy to operate, exclaimed it.
The extent of savings from the program will be dependent on the level of cost inflation, mentioned the statement.
"Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness," said Lundmark.
From quite some time, companies have been following the trend of laying off its employees to cross cutting the cost while maintaining the profits, estimating the economic slowdown.