Nokia today announced it will cut 7,000 jobs, or 12 percent of its workforce, and outsource its legacy Symbian software in cost-cutting measures expected to save around $1.5 billion by the end of 2012.
The cuts, which exceeded early predictions by over 1,000, are part of the Finnish phone maker’s reorganization efforts following a partnership deal with Microsoft, which was finalized last week.
The agreement will see Nokia phasing out its Symbian to adopt Microsoft’s Windows Phone software.
“With this new focus, we also will face reductions in our work force,” said Stephen Elop, Nokia’s CEO. “This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs.”
Elop, a former Microsoft executive, took over the top post at Nokia last September.
Nokia has hemorrhaged smartphone market share — its U.S. percentage is a very low single digit — and the deal announced in February has become the centerpiece of its planned comeback, with much is riding on its success. That comeback could see the Finnish company challenge Apple, RIM, and the slew of phone makers using Google’s Android OS.
At least one research firm predicts Microsoft’s Windows Phone platform will displace Apple for second place by 2015
There is a lot of pressure to debut Windows phones by the end of this year, but 2012 is more plausible for volume shipments.
The cuts will be official once negotiations with labor representatives are complete, and will be followed with consolidation of research and development sites in Finland, China, India, Germany, Denmark, the U.K. and the U.S.
The company also announced plans to close its second headquarters in White Plains, N.Y., ending rumors of a corporate shift to the U.S.
About 3,000 of those cut were working on Symbian and will be transferred to global technology consulting firm Accenture, a move many see as softening the blow. The remaining reductions will be spread out between Finland, Denmark and the U.K.
Nokia, once the leader in handset production, shipped almost 110 million phones last year, but most of those were low-end handsets. Because those models have thinner profit margins, the company slipped to second in terms of revenues behind Apple, according to research firm Strategy Analytics.
A strong smartphone comeback, combined with Nokia’s successful servicing of developing markets with low-end phones, will probably see the company take back the top spot. But the company will most likely continue to face hard decisions to get to it.
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