For Nokia, things seem to be going from bad to worse. Today, to pad news that earnings may be more disappointing than previously thought, the Finnish handset maker announced a slew of changes intended to help it survive the trying times ahead. Three top executives have been replaced, 10,000 jobs will be cut, three facilities will be shut down, the luxury Vertu brand has been sold, and Nokia will be purchasing imaging technology from Scalado.
The 10,000 jobs will be eliminated between now and the “end of 2013,” according to a press release. These losses come in addition to the 14,000 job cuts announced last year. The restructuring will cost €1 billion to implement, but Nokia hopes it will save an extra €1.6 billion by eliminating the jobs. Nokia had about 124,000 employees as of early 2012.
“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,” said CEO Stephen Elop. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”
R&D facilities in Ulm, Germany and Burnaby, Canada will be shut down in addition to a manufacturing plant in Salo, Finland.
Though Elop will remain at the helm, several senior executives have been replaced. Juha Putkiranta will become the new executive VP of Operations; Timo Toikkanen will take over as executive VP of Mobile Phones; Chris Weber will become executive VP of Sales and Marketing; Tuula Rytila will become senior VP of Marketing and Chief Marketing Officer; and Susan Sheehan will step in as senior VP of Communications. Ousted executives Jerri DeVard, Mary McDowell, and Niklas Savander will end their roles on June 30, but remain in “advisory roles” to the new executives.
Finally, the aging Vertu brand has been sold to EQT VI — a private equity group in Northern Europe. Vertu is the global leader in luxury mobile phones, but the category has stagnated with the rise of smartphones.
Nokia plans to continue focusing on differentiating and building its Lumia brand, despite a slow start and low smartphone sales last quarter. As a first step, it has purchased technology from Scalado, which will be used to help bolster the camera performance of its Lumia smartphones.
Since pinning its hopes on Microsoft’s Windows Phone platform, Nokia has had a difficult time recapturing and retaining market share in the rapidly expanding smartphone space.