Elop fights Nokia flames with 3,500 job losses

This round of job cuts is on top of the 7,000 announced earlier this year. Can the mobile company's CEO put out that fire?

by Emma Haslett
Last Updated: 20 Oct 2011
It became clear after Nokia CEO Stephen Elop’s now-infamous speech that he was going to have to do something drastic to rescue the mobile phone manufacturer from its ‘burning platform’. And here it is: the company announced this morning that it’s planning to cut a staggering 3,500 jobs, closing one of its plants in (the disconcertingly rude-sounding) Cluj, in Romania. The company said it’s also expecting to cut jobs in its location division, which makes maps and other location-based services, and is ‘reviewing the future’ of its plants in Finland, Hungary and Mexico. Doesn’t sound good…

What’s surprising about the announcement is that Elop, who left Microsoft a little more than a year ago to take up his role at Nokia, has already made plans to cut €1bn (£871m) worth of costs. Earlier this year, it said it would cut 7,000 jobs worldwide, with 3,000 of those being outsourced to consultancy firm Accenture. Presumably, this latest raft of job-cuts is in response to falling sales, which dropped by 7% in its second quarter, to €9.3bn, leading to a €363m loss, compared with a €227m profit a year earlier.

Elop is also on a quest to improve Nokia’s presence in the smartphone market, where it’s so far failed to make much on an impact. In his speech to employees back in February, he pointed out that while it was a market leader back in the early 2000s, Nokia has become complacent. So while competitors are not only designing market-leading handsets and spawning ‘entire ecosystems’ of app developers to populate their market-places, Nokia is languishing in the background. The company, he added, should take inspiration from fast-moving Chinese manufacturers, which can ‘crank out a device much faster than, as one employee said only partially in jest, "the time it takes us to polish a PowerPoint presentation".’

So what will Elop do to prevent share prices, which have already halved in value this year, and opened this morning 1.7% down, from sliding further? It could do worse than to jump on the tablet bandwagon: after all, it’s already been predicted that Amazon will sell 3m of its new tablet offering, the Kindle Fire, by the end of the year. Nokia could fight fire with Fire, if you will...

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