labels: Telecom, World economy
Nokia slashes 1,700 jobs in response to declining demand news
17 March 2009

Nokia, the world's largest maker of cell phones, said it was cutting 1,700 jobs worldwide in response to "pruned" demand from consumers.

In February it closed, its Jyvaskyla research centre in southern Finland affecting all the 320 jobs there in a move to save costs as the global economic downturn hit the mobile phone industry. It also announced plans to temporarily layoff some 2,500 workers at a plant in Salo, on the southern coast, although production there will continue.

The company, based in Espoo, Finland, will start talks with unions about the cutbacks, Nokia said in a release today. About 700 workers in Finland will likely lose their jobs as Nokia forecasts a 10 per cent slide in industry sales this year. Nokia had 128,445 employees at the end of 2008.

Nokia said in January it aimed to cut annual costs at its key handset unit alone by more than 700 million ($909.3 million) to counter the plunging demand. A month later, Nokia said it would offer resignation packages to employees and encourage them to take unpaid leave to cut costs. The packages are available to all employees, excluding senior executives and factory workers, Nokia said at the time, with a goal to eliminate 1,000 jobs.

Nokia said on Tuesday that, in addition to its handset unit, it would also cut jobs in its marketing unit, corporate development office and global support functions. It will also cut marketing and other activities that will no longer be needed following the Symbian acquisition; streamline the research-and-development organization within devices; and increase efficiency in certain global support functions.

CFO Rick Simonson said in January Nokia cut its dividend and put share buybacks on hold to reflect lower earnings and preserve cash. Nokia sold 1.75 billion in bonds earlier this year to raise additional funds.

Nokia has lost more than half its market value in a year, declining 55 per cent. That's less than US competitor Motorola Inc., which has lost 61 per cent in 12 months. The two companies led the global mobile-phone industry to a decline in sales in the fourth quarter as the slump in consumer demand spread worldwide.

The Finnish company's stock declined as much as 0.33, or 3.7 per cent, to 8.66 in Helsinki, and traded at 8.77 as of 1:45 p.m. local time. (See: Nokia posts 69 per cent profit drop in fourth quarter, loses market share to rivals)

''Nokia continues to seek savings in operational expenses, looking at all areas and activities across the company,'' Nokia said in today's release.

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Nokia slashes 1,700 jobs in response to declining demand