Nokia To Cut Up To 1,000 Jobs

Showing vulnerability amid a weakening global economy, mobile phone maker Nokia plans to cut up to 1,000 jobs to improve its competitiveness.

The job cuts, mainly in marketing, sales and administration in the network operations business, are expected to be completed by the end of the year, Nokia said Thursday. The cuts represent 4.3 percent of its Nokia Networks division work force of 23,000 people worldwide.

The announcement came after a company issued a profit warning earlier this month and disclosed plans to cut 300 jobs at a mobile phone production plant in Bochum, Germany.

Nokia shares fell 2.2 percent initially on the latest announcement but then pared its losses and was trading at 25.17 euros ($21.63), down 1.45 percent.

"This was expected. A much bigger shock was Nokia's earlier profit warning," said Jussi Uskola, an analyst at Nordea banking group. "The layoffs were in line with what the company signaled earlier, and don't indicate any significant downturn."

Arja Suominen, head of communications at Nokia Networks, said most of the layoffs will be made abroad, with some 200 job cuts in Finland.

"The central question is that we are adjusting ourselves to market conditions, and in this way aiming to maintain our competitiveness in the long term," Suominen said.

Until recently, Nokia had maintained optimism amid an industry slowdown and had largely avoided the layoffs and losses announced by its chief rivals, LM Ericsson of Sweden and No. 2 mobile phone maker, U.S.-based Motorola.

But the Finland-based company, known for its cutting-edge technology and trendy mobile phone designs, could not escape fluctuations in the global economy.

Two weeks ago, it said an economic downturn in the United States, its main market, had spread to other regions and "the wireless economy as a whole."

"We have recently seen a weakening in market conditions to levels below our earlier estimates," Nokia's chief executive Jorma Ollila said.

Nokia lowered its expectations for revenue growth from the 20 percent predicted in April to less than 10 percent growth for the three-month period ending June 30. It also said its earnings per share would be between 0.15 euros and 0.17 euros (12 cents and 14 cents) instead of its earlier estimate of 0.20 euros (17 cents). Second-quarter results will be published on July 19.

The company also announced 400 job cuts in its network operations earlier this year, and it laid off 800 people in Texas after transferring some cell phone production to South Korea and Mexico.

Last year, the company, which has sales in 130 countries and 60,000 employees, sold 128 million handsets, 64 percent more than in 1999. Its net profit in 2000 was 3.9 billion euros ($3.5 billion), up from 2.6 billion euros the previous year.

© MMI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed