Nokia, the Finnish telecommunications equipment manufacturer, has recently reported a concerning 20% decrease in sales compared to the previous quarter. In response to this substantial revenue dip, the company has announced plans to reduce its workforce by approximately 14,000 employees, equating to more than 15% of its total workforce.
The significant drop in sales can be primarily attributed to a 40% decline in the demand for 5G equipment in North America. Furthermore, other major markets have also experienced a saturation point in their growth trajectories. Nokia anticipates that these workforce reductions will result in cost savings of 400 million euros by the close of 2024, with an additional 300 million euros expected in 2025.
The United States represents one of the largest markets for Nokia, as well as for its counterpart, Ericsson, another telecommunications equipment provider. While both companies foresee a seasonal upturn in the following quarter, the prevailing uncertainty in the market is likely to persist through 2024.
Pekka Lundmark, President and CEO of Nokia, expressed the company’s belief in the long-term potential of the market. Nevertheless, he acknowledged the prevailing uncertainty by stating that he “simply does not know” when a full recovery is expected. According to Reuters, the adoption of 5G technology for applications such as driverless cars and long-distance medical and engineering jobs, which was anticipated to spark a revolution in automation and connectivity, has been slower than expected within the business sector.