Nokia 5,138 employees in France, around 3,640 working for Alcatel-Lucent International, according to the Reuters report.
A spokesperson for the company subsequently said in the Light of the Reading that the cuts would have an impact on the R&D functions and two French.
“The project, Nokia has presented to the French and European works councils (ALU-I) today, is expected to lead to an estimated reduction of almost 1 233 positions within the R&D and central functions at Nokia, Paris-Saclay and Lannion sites,” said the company in an emailed statement.
The company said that the plans to “streamline” operations in France in line with a global cost saving program. “The goal is to achieve a best-in-class operating model on a global scale, the increase in R&D productivity, and agility to enhance the competitive position of the company and to secure the long-term performance,” he said.
The average number of employees in the firm in finland has fallen from nearly 5,000 roles by 2019, leaving Nokia with 98,322 employees, according to its most recent annual report.
In spite of these reductions, Nokia, the gross profit margin decreased 1.7 percentage points from last year, to 35.7%, and the company was barely profitable, the management net profit of just 18 million ($20.2 million) on sales of 23.3 billion ($26.1 billion).
Last October, Nokia has been forced to slash earnings expectations after its appearance in the fall behind rivals Huawei and Ericsson in the market for the new 5G mobile network equipment.
Its operating margin target has been reduced to only 9.5% for the 2020 fiscal year from a previous forecast of 12% to 16%.
Prior to this, Nokia has been aiming to cut annual costs by 700 million euros ($785 million) between 2018 and 2020, but this target has also been revised downward, to about 500 million euros ($561 million), because of the need to invest more in the fight 5G business.
Chief executive officer Rajeev Suri has recognized that the decision to use the more expensive, programmable components for its 5G products had torn up the profit margins. He also said that Nokia had been “let down” by the delays to one of its suppliers, and subsequently identified as Intel by analysts.
The vendor is now moving on to the application-specific integrated circuits, spurred on by rivals, but he does not expect to complete this transition until the end of 2022.
Although the improvement in profitability in the first quarter, further reductions to the R&D department is a potential source of concern given the market’s perception that Nokia has been lagging behind Huawei and Ericsson in 5G technology.
It is the only one of the “big five” (Cisco, Ericsson, Huawei, Nokia and ZTE), whose investments in R&D have fallen significantly over the past two years, although he does devote a higher percentage of income than any of its rivals.
R&D expenditure ($M)
The risk is that the decision to increase investment in 5G, led to cuts in other areas of products. Since the completion of its 2016 merger with Alcatel-Lucent, Nokia has a lot more diverse as Ericsson, which has sold the media assets and become even more focused on the mobile infrastructure, under its latest strategy.
During an interview with Light Reading in 2019, Suri, who will step down later this year, has denied that Nokia has been scattered from a perspective of R&D. “We have a better range of low-cost countries after having looked at where the talent is available,” he said. “It helped to not have everything in Finland, but the use of the Poland, Greece and other parts of Europe. ”
Today’s announcement, it was met with a set of trade union groups in France, who stated that it was ” contrary to all the pledges made by Nokia in France “, according to Reuters.
At the time of its Alcatel-Lucent takeover deal, Nokia has promised not to cut French jobs for a period of two years, and said that France would be an essential part of its R&D activities and plans for 5G technology.
In its statement, Nokia said the cuts would not affect the employees work for the other French subsidiaries, including radio frequency Systems (RFS), Nokia, Bell Labs France (NBLF) and Alcatel Submarine Networks (ASN).
“We will do our best to ensure that those affected are treated fairly and with respect, and to understand the options and support available to them “, said the company. “We intend to introduce support programs to help employees transition to new positions or careers as much as possible. ”
Iain Morris, International Editor, Light Reading