Nokia Further Globalizes Operations in an Effort to Reduce Costs
Declining market share and profitability have forced Nokia (NYSE:NOK) to move its smartphone assembly operations to Asia, and to reduce costs by cutting 4,000 jobs at the affected plants in Finland, Hungary, and Mexico.
The cuts, which would take place in phases, will bring the total number of jobs lost under CEO Stephen Elop to more than 30,000. Hungary would lose 2,300 jobs, Finland would lose 1,000, and the rest would be cut in Mexico.
Nokia announced the closure of its Romanian plant last September, making the Finnish factory the sole remaining assembly unit in Western Europe.
Nokia’s fourth quarter earnings fell by 73 percent after its smartphone sales declined and its new Windows (NASDAQ:MSFT) phones did not make significant market inroads.
“This was inevitable. It was a surprise it took so long for the decision to be made,” said Steve Brazier, chief executive of technology research firm Canalys. “Stephen Elop may be a polarizing figure, but he is proving effective at driving the change and he should be credited for that,” Brazier said.
Here’s how Nokia shares are reacting to the news:
Nokia Corporation (NYSE:NOK): NOK shares recently traded at $5.17, up $0.04, or 0.78%. They have traded in a 52-week range of $4.46 to $11.75. Volume today was 8,467,000 shares versus a 3-month average volume of 30,310,900 shares. The company’s trailing earnings are $-0.41 per share.
Microsoft Corporation (NASDAQ:MSFT): MSFT shares recently traded at $30.35,. They have traded in a 52-week range of $23.65 to $30.49. Volume today was 19,804,964 shares versus a 3-month average volume of 54,472,500 shares. The company’s trailing P/E is 11.01, while trailing earnings are $2.76 per share.