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Nokia to Lay Off R&D Workers
Jan 11, 2005
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Nokia Corp., the mobile phone maker, said it plans to lay off "a few hundred" research and development (R&D) workers globally, including up to 250 in Finland in a move to cut costs.

The exact number of layoffs, which are focused in Nokia's multimedia division and mostly in Finland and Germany, will be decided later, said Kari Tuutti, head of the division's information department.

"Globally, we will be laying off a few hundred workers," Ms. Tuutti said. "Finland and Germany are our most important countries (in multimedia), but we view the question globally."

Nokia employs 3,000 people in multimedia, half of them in Finland. The German unit has 400 personnel.

Nokia said the layoffs, to be made this year, are aimed at increasing "the efficiency of research and development work across the company."

"Nokia has earlier set a target to bring overall Nokia R&D expenditure down to 9 to 10 percent of net sales by the end of 2006," it said.

Negotiations with employees in Finland began Jan. 11, 2005 and are expected to take several months, after which the number of global layoffs also will be decided, Ms. Tuutti said.

In 2004, Nokia battled a trend of falling profits and losing market share to its rivals, admitting it lagged behind in designing new, innovative handsets, including trendy clamshell models.

In December 2005, market researcher Gartner Inc. said Nokia had increased its global market share for a second successive quarter, reaching 30.9 percent with sales of 51.7 million units. But that compares to a 35-percent a year earlier.

Nokia is still the leader, with South Korea's Samsung Electronics in second place with 13.8-percent market share, according to Gartner, but the Finnish company has an oft-stated goal of 40 percent.

In a bid to restore its lead, Nokia has increasingly turned to the growing market in Asia.

Last month, it announced plans to invest some U.S. $150 million in a new plant in India -- with a work force of up to 2,000 -- to manufacture handsets and mobile appliances to meet growing regional demand.

Ms. Tuutti denied the layoffs signaled a change in policy to move operations abroad, where employment costs are cheaper.

"The driver behind these layoffs has been to increase efficiency by various means, including a review of our products roadmap for the future," she said. "We've made some changes, and we've stopped the manufacture of some non-core products." (SiliconValley.com)

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