Nokia to lay off 600 employees

Cites weakened economy, more competition

Facing a weakening economy worldwide and new competitors, Nokia Corp. today said it planned to cut about 600 employees.

The bulk of affected workers -- 450 -- will be in sales and marketing in Nokia's Markets unit, the manufacturing, distribution, and sales and marketing group created earlier this year as part of a companywide restructuring. One hundred of those people will be in Finland, where Nokia is headquartered. The company had 123,000 employees worldwide as of Sept. 30, according to its Web site.

Nokia also plans to let go of about 130 people who do long-term research for the Nokia Research Center. The change will result in a reduction in the number of areas the research group studies, Nokia said. The majority of the research cuts will affect workers in Finland.

Nokia's global process operations will lose 35 employees, and the company plans to close one of its offices in Finland, relocating workers based there to another office in that country.

The layoffs will go into effect Jan. 1.

The announcement comes on the heels of a poor third-quarter financial report for the No. 1 handset maker in the world, which revealed that its earnings dropped 28% and that revenue was down 5% compared to the same period last year. The company also lost market share.

But Nokia is not alone in making job cuts in the cell phone industry. Last week, Motorola Inc. said it would eliminate 3,000 jobs as part of cost-cutting measures to improve its bottom line.

Nokia faces challenges around the world. The economic downturn is affecting sales in established markets such as Europe, where Nokia has a new competitor, Apple Inc. and its popular iPhone.

Mobile phone sales are still growing in less-developed regions, but people in those markets tend to buy lower-cost phones, and that causes a drag on Nokia's revenue even while its overall phone sales have continued to go up.

Copyright © 2008 IDG Communications, Inc.

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