Nokia cuts staff by 1,700

Job cuts due to falling cell-phone sales

Nokia Corp. will cut its staff by 1,700 as it tries to grapple with falling phone sales, it said today.

The cuts will affect Nokia's Devices and Markets units as well as its corporate development office and global support functions, according to a statement. The cuts will be made globally. The largest number of layoffs will be made in Finland, where a maximum of 700 people will be laid off, according to Eija-Ritta Huovinen, communications manager at Nokia. The U.S. and U.K. will also see cuts, she said, without going into detail.

Nokia first announced plans to make staff cuts on Jan. 22, when it reported its fourth-quarter results, which showed that sales were down about 19%year on year. The company sold 113.1 million phones in the quarter, a decline of 15% from a year earlier and also lower than the 117.8 million it sold during the third quarter. Like other vendors in the sector, Nokia is aiming to lower its costs. The company plans to cut more than €700 million ($900 million U.S.) in costs by next year.

On Feb. 11, Nokia detailed a first round of cuts, announcing that it will be closing its research and development site in Jyväskylä, Finland. In the process, about 320 employees will be laid off. The company is also making temporary cuts at its production facility in Salo, Finland.

The mobile phone arena, like many other markets, has been hit by the economic downturn. A fourth quarter that was dismal at best set the stage for a very rough 2009, according to market research firm IDC. Fourth-quarter shipments fell by 11.6% year over year, marking the first time the holiday quarter has not recorded double-digit growth in seven years, IDC said in a statement. IDC said it expects mobile phone sales to drop about 8% in 2009.

Copyright © 2009 IDG Communications, Inc.

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