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While the company reported improved 3Q earnings, it still lags in the smartphone race
Nokia, the world’s largest cell phone manufacturer, announced Thursday that it would cut 1,800 jobs worldwide to jumpstart smartphone production. The announcement follows a better-than-expected third quarter earnings report that puts earnings at €322 million, or $447.6 million, compared to predictions from Bloomberg analysts that put Nokia’s third quarter earnings closer to €182.5 million, following a €913 million loss this time last year.
CEO Stephen Elop, who took over the company one month ago, said in the company’s earnings report: “our company faces a remarkably disruptive time in the industry, with recent results demonstrating that we must reassess our role in and our approach to this industry… We will make both the strategic and operational improvements necessary to ensure that we continue to delight our customers and deliver superior financial results to our shareholders.”
The company believes that the cuts will streamline operations for Nokia’s smartphones following several delays to new products and criticism that Nokia’s Symbian software does not deliver a satisfying user experience. According to the company’s announcement, “In Symbian Smartphones, Nokia plans to renew product creation to increase responsiveness to consumer demands and reduce time to market.” Juha Äkräs, executive vice president of human resources, added: “The aim is to accelerate the company's transformation towards a leading mobile solutions provider, and to do this we are simplifying and integrating operations within our product creation and corporate functions."
The cuts will specifically target the software development and Web services departments in order to improve performance in those departments.
Since Apple introduced the iPhone in 2007, Nokia’s stock has declined considerably, losing more than two-thirds of its value in three years. Nokia’s market share has also fallen to 40% in 2010, compared to 46% in 2009. By 2014, Nokia’s market share is projected to fall as low as 30%.
Nokia made an attempt to get back into the game by launching its N8 and E7 smartphones, but the company’s new Symbian^3 operating system was criticized by many as too little too late, and iPhone sales have continued to outpace Nokia’s much larger lineup. Some analysts have even speculated that Nokia might abandon its Symbian operating system in favor of Microsoft’s or Google’s operating systems.
To be fair, sales of Nokia phones rose 16% in the third quarter and 5% in year-over-year growth, reaching 10.27 billion this year compared to €9.81 billion this time last year.
Following the company’s earnings report, Nokia shares rose more than 8% on Thursday.
Image source: mobilegazette.com
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