Nokia to Cut 10000 Jobs as Elop Tries to Stanch Losses

Nokia Oyj (NOK1V) cut its earnings forecast for the second time this year and said it will reduce as many as 10,000 jobs and shut production and research sites in Chief Executive Officer Stephen Elop’s biggest overhaul.

The stock fell to the lowest since 1996, pushing Nokia’s market value below $10 billion. As part of the changes, sites in Finland, Germany and Canada will be closed and executives Niklas Savander, Mary McDowell and Jerri DeVard will leave, Espoo, Finland-based Nokia said on 14 June.

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. The company is forced to reduce costs or risk going out of business in as little as two years, said Alexander Peterc, an Exane BNP Paribas analyst in London.

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

Nokia fell as much as 12 percent to 1.96 euros and traded at 1.97 euros. It had declined 49 percent in the past 12 months through 13 June. The company has a market value of 7.4 billion euros ($9.3 billion), down from a peak of more than 300 billion euros in 2000.

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The job cuts, 3,700 of which will take place in Finland, amount to almost a fifth of the total excluding a joint venture with Siemens AG. (SIE) Elop had already announced more than 10,000 job cuts across the company. He said in April that Nokia would speed up a cost-cut program and take further actions if needed.

Nokia has lost more than 70 billion euros in market value since Apple introduced the iPhone in 2007, taking the lead in smartphone innovation. While Nokia’s falling value brings it closer to becoming a takeover target, the company needs to stabilize its business to attract suitors, said Lars Soederfjell, an analyst with Bank of Aaland in Stockholm.