Nokia’s future is looking increasingly fragile as it announced it would be cutting 10,000 jobs on Thursday of last week and revealed its second profits warning in two months.
Since Stephen Elop took over as chief executive in September of last year the Finnish company has slashed 40,000 jobs as part of a cost cutting programme. Last week saw its shares fall by 18%, dropping below the €2 mark for the first time since 1996.
In a mobile world that is now dominated by ever changing smartphones, Nokia has pinned its future hopes on its Lumia range of phones which are operated by Microsoft’s Windows Phone interface. The problem is that between the lavish unveiling last November and March of this year the phone had only sold 3 million units compared with Apple’s iPhone, which had sold 72 million during the same period.
Nokia was the world’s largest mobile phone manufacturer until earlier this year when Samsung overtook it. In the last five quarters the company has burned through €2.1 billion, meaning that without a huge cost cutting programme its €4.9 billion reserves could vanish within a few years. In addition to job cuts, the firm announced it would be closing its last factory in Finland, closing research and development facilities in Germany and Canada and retreating from non-key markets so it can concentrate on America, China and the larger European economies.
Chief executive Elop stressed that Nokia’s misfortunes were down to bad marketing and promotions. “We have truly great products, but aren’t getting the traction that we would prefer,” he said.
The firm is hoping that the new operating platform Windows Phone 8 will boost sales. Microsoft is to release a test version next week, while actual Nokia phones running on the system will be available before Christmas.
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