Nokia cuts 10,000 more jobs as losses deepen

Thu Jun 14, 2012 10:36am EDT
 
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By Tarmo Virki

PARIS (Reuters) - Nokia plans to cut 10,000 more jobs, bringing the total to one in three staff, as it loses market share to cellphone rivals Apple and Samsung and burns through cash, raising new fears over its future.

In a second profit warning in nine weeks, Nokia said on Thursday that its phone business would post a deeper-than-expected loss in the second quarter due to tougher competition, which it expected to continue.

Once the world's dominant mobile phone provider, Nokia was wrongfooted by the rise of smartphones and is struggling to keep up with Apple, Samsung and Google. It is also losing market share in cheaper, more basic phones.

Chief Executive Stephen Elop is placing hopes of a turnaround on a new range of smartphones called Lumia, which use largely untried Microsoft Corp software. But Lumia sales have so far been slow, exasperating investors who have seen its stock crash more than 70 percent since it announced the software switch in February 2011.

"The job cuts and profit warning underline the seriousness of the challenges Nokia is facing, particularly in light of the eye-watering competition from Apple and Samsung," said Ben Wood, head of research at CCS Insight.

Nokia, whose cash position is increasingly scrutinized by investors, also said restructuring-related cash outflows would be around 650 million euros in the remaining three quarters of 2012 and around 600 million in 2013.

With the cost of Nokia's debt rising, the most bearish of analysts in a Reuters poll last month said the company could even be at risk of default if it fails to slow its cash burn.

Over the past five quarters, the onetime darling of mobile telcoms has eroded its cash pile by 2.1 billion euros - a rate that would wipe out its entire 4.9 billion reserves in a couple of years.   Continued...

 
Jekaterina Kapanen (R) leaves the Nokia mobile phone plant, after Nokia's CEO Stephen Elop's statement that was relayed by video link to employees in Nokia locations around Finland, in Salo, south-western Finland, June 14, 2012. Loss-making Finnish cellphone maker Nokia plans to cut another 10,000 jobs globally in its biggest revamp in recent history, while it warned the second-quarter loss from its cellphone business would be larger than expected. The cuts, which include the closure of Nokia's only plant in Finland, bring total planned job cuts at the group since Elop took over as chief executive in 2010 to more than 40,000. REUTERS/Antti Aimo-Koivisto/Lehtikuva