Nokia Update: Job Cuts, Lower Lumia Forecasts
Nokia (NYSE:NOK) announced Wednesday that it will cut 17,000 job from its joint venture Nokia-Siemens Network by 2013 as part of the restructuring process. [1] Nokia has done this in an effort to save 1 billion Euros in annual costs by 2013. Earlier this year, Nokia had plans to unload a controlling stake in the unprofitable venture to private equity firms. However, the talks fell through, which means the only resort in front of Nokia were the job cuts for the venture to return to profitability.
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Nokia looking to improve profitability
Nokia has in the past tried to improve its profitability by partnering with Microsoft (NASDAQ:MSFT). It has time and again reiterated its target of reducing operating expenses by 1 billion Euros by 2013 from 5.65 billion Euros in 2010 (see Nokia’s Recovery in 2012 Supports $6.60 Estimate). If Nokia is able to achieve its target of cost savings, its margins will get a boost.
Analysts cut Lumia sales forecast
Earlier this week, Nokia shares tumbled almost 15% in two days as analysts cut their sales forecasts for the company’s latest Windows based smartphone, the Lumia 800, which went on sale in six European markets this month (see Nokia’s Shares Tumble as Analysts Lower Lumia Sales Forecasts). Since its launch late last month, the Lumia 800 has been the subject of rave critical reviews and praise from many quarters which saw a surge in market expectations and hopes for a turnaround saw optimism return to the stock.
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