Nokia Announces Layoffs, Restructuring, Despite Q3 Profit

 
 
By Fahmida Y. Rashid  |  Posted 2010-10-21
 
 
 

Nokia will cut 1,800 jobs and restructure its smartphone business, despite a strong third-quarter performance, the Finnish phone manufacturer disclosed on Oct. 20.

Reporting a third quarter profit of 529 million euros, or $741 million, Nokia surpassed analyst expectations of a profit of less than 300 million euros, as polled by Dow Jones Newswires. This was a complete turnaround from last year's third-quarter loss of 559 million euros, or $783 million. Revenues were driven by higher prices for handsets, according to Nokia, hitting 10.3 billion euros, compared with 9.8 billion euros last year.

"All in all, our devices and services divisions delivered," new President and CEO Stephen Elop said on a conference call. However, despite selling 110.4 million devices in the quarter, up 2 percent from last year, the company struggled against Apple's iPhone, Research In Motion's BlackBerry and phones based on Google's Android operating system.

"According to our preliminary estimate, we lost market share," said Elop.

Nokia said the layoffs are necessary to make the company more efficient. Elop said he has already identified areas throughout the product development line, but declined to name any specifics. "A number of job cuts are related to streamlining particularly around the Symbian platform," he said.

Symbian Foundation chief Lee Williams unexpectedly quit earlier this week, citing "personal reasons."

Nokia will shift its focus on the cross-application Qt framework for mobile application development, the company said. By focusing on Qt, which is used to build user interfaces and applications for both internal and external development, Nokia doesn't have to abandon its legacy Symbian-based applications or Symbian developers in order to move to a more modern smartphone operating system. MeeGo is a smartphone operating system Nokia is working on with Intel.

At the moment, the older Symbian and upcoming MeeGo platforms are separate, forcing developers to develop applications separately for each operating system. Qt will allow developers to create software that can run on both platforms, Nokia said.

"The decision to focus on Qt as the sole application development framework will ensure that applications will continue to be compatible with future evolutions of Symbian as well as upcoming MeeGo products," Nokia said in a statement.

This also lowers the barrier for entry for developers interested in developing for Nokia as Qt works well with Microsoft Windows operating systems, Linux, embedded Linux and Mac software.

"Nokia is focusing on Qt as a robust, tried and tested framework that unlocks the hardware, software and service capabilities of the existing Nokia smartphone range as well as creating huge opportunities for future Symbian and MeeGo products," Nokia said.

Nokia shipped 110.4 million devices in the quarter, up 2 percent from 2009, but said it expects a drop in the fourth quarter.

Third-quarter market share slid to 30 percent, compared with 34 percent in last year's third quarter, and 33 percent in the second half of 2010, the company said. The company expects to see full-year market share slip slightly compared with 2009, revising earlier statements that market share will remain flat in 2010.

Nokia still commands 40 percent of the global market. In sheer numbers it has the most number of users on its Symbian-based phones.

As part of the restructuring, Nokia will make changes to services, moving away from end-to-end product-specific stores toward an integrated Ovi software applications store for all devices.


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