Nokia is planning 10,000 layoffs from 2021 through 2022. The communications and network equipment provider plans to shift spending from general areas to more R&D (research and development). Nokia CEO Pekka Lundmark, on the job for a year, is striving to bolster the company for 5G wireless network contract bids and deployments vs. rivals Ericsson and Huawei.
The Nokia layoff plan emerges less than one year after the company's Alcatel-Lucent business laid off about 1,200 employees.
Related List: All Technology Industry Company Layoffs
Nokia Business Challenges, 5G Competition
Amid the 5G market hype, Nokia has struggled to generate growth in its traditional telecom equipment business. In October 2019, the company slashed its 2019 and 2020 profit outlook and halted dividend payouts, saying profits would come under pressure as the company increased investments in 5G technology, Reuters notes.
More recently, Nokia has been mulling potential asset sales or mergers, according to a February 2020 report. Potential suitors could include Ericsson and Samsung, the February 2020 report suggested.
Still, those asset rumors surfaced before CEO Pekka Lundmark arrived in March 2020.
Nokia CEO Pekka Lundmark's 5G Plan
Lundmark is expected to present his long-term strategy, discuss action plans and set financial targets during the company’s capital markets day on March 18, 2021, Reuters says.
Among the expected points of emphasis: Although Nokia will shed headcount, costs at the company will not decline, Nordea Analyst Sami Sarkamies told Reuters. The net result is costs shifting from general expense areas toward research and development for 5G, cloud and digital infrastructure, he added.
Nokia named Lundmark as CEO in March 2020. Lundmark previously was president and CEO of Fortum, an energy company in Finland that he helped to revitalize. Earlier, he was president and CEO of Konecranes, a global material-handling technology firm. And yes, Lundmark spent a decade with Nokia in the 1990s -- where he rose to VP of strategy and business development.