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vNokia to Cut 10,000 Jobs as Elop Tries to Stanch Losses

Nokia Oyj (NOK1V) plans to cut as many as 10,000 jobs and close facilities as Chief Executive Officer Stephen Elop struggles to halt mounting losses and reverse plunging smartphone sales.

Enlarge image Nokia to Cut Up to 10,000 Jobs in Bid to Halt Losses

Nokia began selling its first handsets running Microsoft Corp.’s Windows Phone software in the fourth quarter to stop consumers switching to Apple Inc.’s iPhone and devices running Google Inc.’s Android operating system. Photographer: Ville Mannikko/Bloomberg

Enlarge image Nokia to Cut Up to 10,000 Jobs in Bid to Halt Mounting Losses

Nokia had 53,553 workers at the end of March, excluding the network-gear joint venture with Siemens. Photographer: Tomi Setala/Bloomberg

As part of the overhaul, sites in Finland, Germany and Canada will be closed and executives including Niklas Savander, Mary McDowell and Jerri DeVard will leave, Espoo, Finland-based Nokia said today in a statement. The job cuts amount to almost a fifth of the total excluding a joint venture with Siemens AG. (SIE)

Elop, who took over as CEO in 2010, is reorganizing Nokia after market-share gains by Apple Inc.’s iPhone and Samsung Electronics Co. devices led to a slump in sales and four straight quarterly losses. Nokia’s handset shipments declined 24 percent in the first quarter, allowing Samsung to overtake the company as the world’s biggest mobile-phone maker.

“We must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions,” Elop said in the statement.

Nokia said it now predicts second-quarter operating margins at the devices unit to be worse than a loss of 3 percent of revenue in the first quarter. Nokia had projected margins to be “similar to or below” the first-quarter level.

Nokia fell 1.8 percent to 2.22 euros in Helsinki yesterday, bringing its decline in the past 12 months to 49 percent.

Elop had already announced more than 10,000 job cuts across all areas of the company. He said in April that Nokia would speed up its cost-cutting program and take further actions if needed.

IPhone Challenge

Nokia has lost more than 70 billion euros ($88 billion) in market value since Apple introduced the iPhone in 2007, taking the lead in smartphone innovation. To challenge Apple and handset makers using Google Inc.’s Android software, Elop adopted Microsoft’s Windows Phone, abandoning Nokia’s homegrown Symbian operating system.

Nokia shipped more than 2 million Lumia smartphones running Windows Phone in the first quarter, while Apple sold 35.1 million iPhones. Nokia’s operating margin for mobile phones plunged to 3.7 percent last year from more than 20 percent before Apple introduced the iPhone in 2007.

The company is partly through a program announced in April 2011 to save 1 billion euros in annual operating costs for the handset division from 2013. It has consolidated development sites, closed a factory in Romania, and said it would convert plants in Finland, Hungary and Mexico from assembly to software customization. Units working on its older Symbian smartphone system were transferred to Accenture Plc, which subsequently cut jobs in those functions.

Nokia had 53,553 workers at the end of March, excluding the network-gear joint venture with Siemens. Including Nokia Siemens Networks, the company employed 122,148 people, down 6.7 percent from a year earlier.

Nokia Siemens, which also is struggling to return to profit, is cutting 17,000 jobs worldwide to save 1 billion euros in annual operating expenses and production costs by 2013.