Nokia Cuts 1,800 Jobs

Lost market share and streamlining particularly around the Symbian platform led to job cuts

The world's top mobile phone maker Nokia announced 1,800 jobs cuts right on the heels of stellar third-quarter results on Thursday and just one month after a new chief executive took the helm.

"All in all, our devices and services divisions delivered," new CEO Stephen Elop said although he noted that there was still a great deal of ground to be made up. "According to our preliminary estimate, we lost market share. We were not able to keep up with demand on the markets, especially towards the lower end of our product offering," he added.

Announcing a major strategy shift Nokia said it would now focus on developing applications on the Qt framework, which essentially removes the somewhat conflicting two-headed approach of developing for both Symbian and Meego.

Elop said on Oct. 21 that he had already identified areas throughout the product development line that could be made more efficient. "A number of job cuts are related to streamlining particularly around the Symbian platform," he said.

The company hopes that under Elop's leadership, Nokia will be able to take its Symbian-based, and later MeeGo-based smartphones, into the battle and regain the market share that has been chipped away by the iPhone, Blackberry, and Android-based phones.

Nokia continued to take a beating in market share in the third quarter, which dropped to 30% compared to 34% for the same period last year and 33% in the second quarter of 2010.

The company, which had previously said it expected its full-year market share to remain flat in 2010, said on Oct. 21 that it now expected market share this year to slip slightly compared to 2009.

The shift to Qt will allow developers both in Nokia and at large to create applications for both Symbian and MeeGo platforms, without having to code two entirely different sets of software.

This essentially abandons the idea of further incarnations of Symbian, which has been seen as an outdated technology, unable to keep up with faster and easier-to-use operating systems of Nokia's top competitors.

Elop, who is the first non-Finn to captain Nokia, took over in September from a beleaguered Olli-Pekka Kallasvuo, who had been blamed this year for Nokia's failure to shine in the smartphone market. His background as a Microsoft executive hinted that Nokia would shift focus more strongly to software development, an area where the company was seen to lag behind.

Nokia's return to profit, posting an unexpected 529 million euros (US$741 million), far outstripped the expectations of analysts polled by Dow Jones Newswires, who on average predicted a net profit of less than 300 million euros.

"The biggest surprise was the profit margin for the mobile phones unit, which was better than expected, and which pulled results for the entire company above expectations," Nordea's senior analyst Martti Larjo told the Finnish financial daily Taloussanomat.

Net sales of 10.27 billion euros were meanwhile in line with industry expectations for the quarter.

"The good numbers are largely a result of an increase in the average price of phones," said Pohjola Bank senior equity analyst Hannu Rauhala, who added that the better-than-expected results bode well for the rest of the year.

Copyright Agence France-Presse, 2010

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