uploads///

Behind Nokia’s Layoffs

By

Updated

About 107 jobs cut in Naperville last month

In recent years, Nokia (NOK) has cut hundreds of jobs in several markets. In the United States, the company eliminated 107 positions at its site in Naperville last month, bringing the number of job cuts at the site to ~300 in a period of about one year, according to a Chicago Tribune report citing county and Nokia officials.

Nokia has also cut jobs in France and its home country, Finland, since it acquired Alcatel-Lucent in 2016.

Article continues below advertisement

Nokia aims for $1.4 billion in cost savings

The job cuts at Nokia are part of a program to cut costs. Nokia is executing on a plan to cut its expenses by ~$1.4 billion by the end of this year. To achieve this cost-savings goal, the company has set a target of eliminating ~$920 million in sales costs and reducing its operating expenses by ~$460 million.

Weakness in Nokia’s core networking business has also contributed to the recent layoffs at the company. Nokia’s network revenue fell 6.0% YoY (year-over-year) in the second quarter, leading its total revenue to drop 6.0% YoY to $6.1 billion in the period. Revenue fell less than 1.0% YoY at Ericsson (ERIC) in the second quarter.

Hope pinned on 5G deployment

A slowdown in mobile operators’ spending on network gears has generally rattled gear vendors, but Nokia and Ericsson are holding out hope that the development of 5G (fifth-generation) networks will help them return to growth.

Early this month, Verizon (VZ), a customer of both Nokia and Ericsson, activated what it described as the world’s first 5G network in four metropolitan areas in the United States. AT&T (T) is also on track to launch 5G services in up to a dozen US markets. T-Mobile (TMUS) is also undergoing preparations to build a nationwide 5G network, and it’s tapped Nokia as one of its suppliers.

Advertisement

More From Market Realist