Nokia Networks to cut up to 1,000 jobs

Shares knocked, Merrill sees more warnings

By Allen Wan & Gareth Vaughan

Last Update: 8:31 AM ET June 28, 2001 HELSINKI (FTMW) -

Finnish telecoms equipment maker Nokia (NOK: news, msgs, alerts) said on Thursday it would cut up to 1,000 staff from its Nokia Networks infrastructure unit by the end of the year as it faces up to a tougher business environment. "The key target of this restructuring is to bolster operational excellence and competitiveness by further developing the Nokia Networks' organisation in order to always meet changing market requirements," the company said in a statement.

Nokia (SE:000053994: news, alerts) said that the layoffs at its infrastructure unit, between 900 and 1,000 globally, would be done gradually but be completed by the end of the year.

Shares in Nokia fell as much as 3 percent in early trading but regained ground to stand 0.2 percent at €25.60 in mid-afternoon trade. The company's U.S.-listed shares fell 50 cents in New York to $21.45 on Wednesday.

Nokia Networks currently has 23,000 staff.

Separately, Merrill Lynch said it expected Nokia to make further warnings following a shock profit warning from the company on June 12. It said the Network division would be under pressure from delayed spending by operators and mobile phone margins would shrink.

Merrill said Nokia's strategy of pushing its mobile data and Internet services would extend its industry leadership. However, in the short-term "we do not believe that Nokia's profit warning is a one quarter event and believe that the shares could continue to suffer". See MarketPulse on Merrill Lynch on Nokia.

Profit warning

Earlier in June Nokia, the world's biggest mobile phone maker, warned that second quarter and second half-year results would be hit by the global economic slowdown. See story on warning.

In the first quarter Nokia Networks sales rose 35 percent from the same period of 2000 to €2.02 billion, comprising less than a third of the group's total sales of €6.5 billion. Sales from Nokia Mobile Phones rose 20 percent to €4.8 billion. Nokia sells more than one in three of all mobile phones sold worldwide.

Nokia's job cuts follow a trend among telecoms equipment makers as sales slow.

-- PHO (owennos@bigfoot.com), June 28, 2001