First Read

A first take on enterprise IT technology news and events.

Nokia Begins Layoffs After Alcatel-Lucent Acquisition

The company reportedly will cut as many as 15,000 jobs as officials look to make Nokia more competitive in the networking space.

Download the authoritative guide:

tech business

Nokia has begun slashing jobs in the wake of its $16.6 billion acquisition of Alcatel-Lucent as the company looks to save as much as $1.03 billion by the end of 2018.

Nokia officials this week said that as part of its plans to absorb the networking company into the fold and to focus more attention and resources on such emerging technologies as 5G, the cloud and the Internet of things (IoT), it will cut jobs in such areas as research and development, sale operations and corporate functions. The company did not say how many jobs will be lost, but Bloomberg, citing unnamed sources, reported that between 10,000 and 15,000 people could be laid off.

Reuters reported that 1,300 employees in Finland—where Nokia is headquartered—will lose their jobs, as will 1,400 in Germany. In France—where Alcatel-Lucent was based—the company will see 400 job cuts, though it will bring another 500 R&D jobs to the country.

Nokia now has about 104,000 employees worldwide. Company officials said they are meeting with employee representatives in almost 30 countries. Nokia also is looking to reduce costs in such areas as real estate, services, supply chain, procurement and manufacturing.

In a statement, Nokia President and CEO Rajeev Suri said the cost reductions were needed to ensure that the company can compete in an increasingly competitive global networking market.

"When we announced the acquisition of Alcatel-Lucent, we made a commitment to deliver (more than $1 billion) in synergies—and that commitment has not change," Suri said. "We also know that our actions will have real human consequences and, given this, we will proceed in a way that that is consistent with our company values and provide transition and other support to the impacted employees."

Nokia's acquisition of Alcatel-Lucent brought together two companies that were in transition and were falling behind such rivals as Ericsson, Huawei Technologies and Cisco Systems in a rapidly changing networking space that is dealing with such trends as software-defined networking (SDN), network-functions virtualization (NFV), 5G, the IoT, big data and the cloud. The goal of the deal, announced a year ago, was to create a new company with the size and broad product portfolio to take on the larger players in the space.

Nokia assumed control of Alcatel-Lucent in January.

"We will move quickly to combine the two companies and execute our integration plans," Suri said at the time. "Nokia and Alcatel-Lucent will offer a combined end-to-end portfolio of the scope and scale to meet the needs of our global customers. We will have unparalleled R&D and innovation capabilities, which we will use to lead the world in creating next-generation technology and services."