The cost savings programme, announced in October 2018, has also led to an assessment of its R&D efforts which have resulted in “major adjustments on a global scale,” the spokesman of Nokia, said by email, adding that the implementation has already started in some countries and is now impact on the Finnish vendor’s operations in France.
“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 ensure the long-term performance,” the spokesperson continues.
The proposed job cuts of the target of the R&D and central functions at Nokia, Paris-Saclay and Lannion site in France, according to the spokesperson, resulting in a “reduction of nearly 1 233 positions” it.
Nokia continues to work on strengthening its position to compete with larger rivals Ericsson and Huawei in the course 5G ramp up. He has suffered a setback, due in part, to an earlier decision to rely on field programmable gate array (FPGA) silicon for the 5G, which has come to be high-cost and cut it in Nokia 5G profit margins. Nokia has since moved to the development of custom SoCs. Broadcom has been appointed as a new partner last week for Nokia Powered by ReefShark 5G portfolio, joining Marvell, and Intel.
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In Q1 2020, Nokia net sales decreased by 2% year on year and the seller has lowered its forecasts for the year, the decrease in the operating margin from 9.5% to 9.0%
Nokia has presented its plan of dismissal to the French and European works councils (ALU-I) today, which is still the subject of consultation with the works councils, and union representatives. This process must conclude before the final result is known, according to the spokesperson.
Three Nokia France affiliated companies, radio frequency Systems (RFS), Nokia, Bell Labs France, and Alcatel Submarine Networks (ASN) are not included in the draft of the employee reductions.
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“Nokia is fully committed to supporting the affected employees during the process. 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. We intend to introduce support programs to help employees transition to new positions or careers, as much as possible,” the Nokia spokesperson said.
The proposed layoffs represent about one-third of the 3,640 Nokia employees in France working for Alcatel-Lucent International units, according to Reuters. All in all, the employees of Nokia 5,138 people in the country, the report notes.
Speaking on Nokia’s first-quarter earnings in April, the cfo Kristian Pullola, who will step down at the end of the month of August, said the seller of the cost-reduction initiative was on track to achieve its year end target of €500 million in cost savings.
In April, Nokia full the year 2020 fixed cost estimates were increased by approximately 130 million euros, due to net foreign exchange rate fluctuations since the first 2018 program announcement
“This has created an additional headwind to achieve our planned savings. However, we are confident that we will achieve our goal,” Pullola said in April, according to a SeekingAlpha transcript.
Nokia has completed its acquisition of Alcatel-Lucent in 2016, and Reuters reported that the trade union CFE-CGC in France is unhappy with a new plan of job cuts, saying it goes against the commitments of the seller argued for the merger that it would preserve jobs and develop the R&D in the country.