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Strategic Shift: Nokia’s Cost-Cutting Measures Amidst Challenging Market

Payam Javan: Nokia is set to cut up to 14,000 jobs as part of a cost reduction strategy following a 20 percent decline in third-quarter sales, driven by weakened demand for 5G equipment. The company, grappling with a challenging market, highlighted a 40 percent drop in net sales in its key North American market during Q3. CEO Pekka Lundmark emphasized the necessity of the job cuts, targeting savings of 800 million to 1.2 billion euros by 2026, and a reduction in the employee base from 86,000 to 72,000-77,000.

The broader telecommunications industry, including Nokia and Ericsson, faces uncertainty and slow growth in the adoption of 5G technology. Despite challenges, Nokia maintains its mid-to-long-term market belief but acknowledges the unpredictability of recovery timing. Lundmark stressed the industry’s need to invest in faster mid-band equipment to address the growing data traffic, with only 25 percent of 5G base stations worldwide, excluding China, currently equipped with mid-band capabilities. While there are signs of potential demand recovery, the company anticipates a more normal seasonal improvement in network businesses in the fourth quarter.

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