Nokia Oyj plans to cut as many as 14,000 jobs, or 16% of its workforce, as reduced investment in fifth-generation mobile infrastructure from US and European operators weighs on the company.
That represents a 10% to 15% reduction in personnel expenses and is expected to save as much as €400 million ($421 million) next year and an additional €300 million in 2025, the Espoo, Finland-based mobile network company said in a statement Thursday.
Makers of 5G equipment are struggling as operators in the US and the European Union cut capital expenditures and adjust their inventories. Swedish rival Ericsson AB delivered a disappointing outlook this week, saying market weakness will persist into the fourth quarter and beyond.
Nokia also posted weaker-than-expected earnings and said the slump in the mobile networks market would be deeper than it previously forecast.
Adjusted operating profit was €424 million ($467 million) in the third quarter, according to a separate statement. That compares to an average analyst estimate of €545.2 million, according to a Bloomberg survey.
Nokia cut its forecast for the total addressable market, expecting a 9% slump for the mobile networks market overall in 2023. It had previously expected a 2% decline. It now expects to perform in line with that market, or faster than its peers, having earlier projected a better performance than rivals.
“Mobile Networks net sales declined 19% as we saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America,” Chief Executive Officer Pekka Lundmark said in the statement.
Adjusted earnings per share came to 5 cents, less than the 7 cents estimated by analysts.
Lundmark said Nokia is on track to achieve the lower end of its net sales target for the year and the mid-point of its comparable operating margin range. He had previously painted a gloomy picture for the second half of the year when the company downgraded its 2023 guidance in July.
Nokia kept its full-year guidance for sales to €23.2 billion to €24.6 billion, with a comparable operating margin in a range of 11.5% to 13%.
(Updates with details starting in fifth paragraph.)