Nokia confirms 'thousands' of job losses over the next two years after third-quarter profits drop

  • Nokia announced a new cost-cutting program on Thursday, targeting annual cost savings of 700 million euros by the end of 2020.
  • In an interview with CNBC on Thursday, Nokia's president and CEO Rajeev Suri said the company planned to cut "thousands" of jobs worldwide over the next two years.
  • The Finnish company posted 5.5 billion euros ($6.27 billion) in net sales for the three-month period ending Sept 30.

Telecom network equipment maker Nokia announced "thousands" of global job losses over the next two years on Thursday, shortly after reporting quarterly results in line with market expectations.

The Finnish company posted 5.5 billion euros ($6.27 billion) in net sales for the three-month period ending Sept 30. Analysts polled by Reuters had been expecting third-quarter net sales to come in at around 5.4 billion euros.

Speaking to CNBC's Willem Marx on Thursday, Nokia's president and CEO Rajeev Suri said a new cost reduction program would mean "thousands" of job losses over the next two years.

Here are the key takeaways:

  • Third-quarter net sales came in at 5.5 billion euros, compared to 5.4 billion euros expected from analysts polled by Reuters.
  • Non-IFRS operating profit for the three month period ending Sept 30. stood at 487 million euros, down 27 percent from 668 million in the same quarter a year earlier.
  • Nokia announced it will cut "thousands" of jobs globally as part of a cost reduction program to save 700 million euros a year by the end of 2020.

The program is designed to generate annual cost savings of 700 million euros by the end of 2020. It comes as the Finnish group is due to complete a 1.2 billion euro cost-saving program at the end of 2018.

"The ones that win in this sector are the ones that have lean operations and a strong low cost structure. So, we don't have the headcount number yet but we will start to work on that and go country by country in terms of revealing those numbers at the right time," Suri told CNBC on Thursday.

When asked whether the job losses would most likely be in the hundreds or thousands, Suri replied: "Well, there will be thousands."

In a statement released alongside the company's latest figures, Nokia's chief executive said the third-quarter results had validated an earlier view that conditions would improve in the second half of the year.

"This was particularly evident in our excellent momentum in orders, growth across all five of our Networks business groups, and improved profitability compared to the first half of the year," Suri said.

"Despite some risks related to short-term delays in project timing and product deliveries, we remain on track to deliver on our full-year guidance."

Litmus test

Nokia has struggled with deteriorating growth since the current generation of 4G mobile equipment peaked in 2015.

It comes as the company faces a flurry of headwinds at present, including falling spending among telecom operators and stiff competition from the likes of Huawei and Ericsson.

Nonetheless, shares of Nokia are up more than 17 percent year-to-date, as investors remain hopeful of a new network spending cycle — driven primarily by rising demand for new 5G networks.

5G has become somewhat of a litmus test for technology leadership amid America's intensifying stand-off with China over trade and national security.