Finland-based technology company Nokia (FR:NOKIA) has announced 14,000 job cuts as part of its ambitious cost-cutting plan after reporting disappointing Q3 2023 earnings. According to this plan, Nokia is reducing its current workforce of 86,000 employees to a more streamlined range of 72,000 to 77,000 positions. The company is targeting savings in the range of €800 million to €1.2 billion by 2026. Further, it anticipates savings of at least €400 million in 2024, followed by an additional €300 million in 2025.
Commenting on the job cuts, Nokia’s CEO Pekka Lundmark said that even though it is a difficult decision, it is a “necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness.”
Following this announcement, the company’s stock on Euronext Paris experienced a 3.72% decline today. Meanwhile, the stock has dropped over 5.5% in trading on the local exchange in Finland.
Nokia is a global company manufacturing mobile devices and network infrastructure.
Q3 2023 Results: Outlook Reaffirmed Despite Weak Numbers
Nokia’s third-quarter sales decreased by 20% year-over-year to €5 billion. The company mentioned that higher interest rates and an uncertain macroeconomic environment lead to reduced operator spending. Sales of the company’s Mobile Networks business declined by 24%, mainly impacted by its markets in North America, as consumers tried to hold on to their cash flows by keeping smaller inventories. The company also saw some moderation in the growth from its 5G deployments in India, which could not offset the slowdown in North America. Sales of Network Infrastructure business fell by 18%.
The company’s comparable operating margin declined by 200 bps (basis points) to 8.5%. Nokia aims to achieve a comparable operating margin of at least 14% by 2026.
Moving forward, the company maintained its outlook for the full year 2023, anticipating net sales in the range of €23.2 billion to €24.6 billion. The 2023 comparable operating margin is expected to be in the range of 11.5% to 13%.
Is Nokia Stock a Buy Now?
According to TipRanks, NOKIA stock has been assigned a Moderate Buy rating from analysts at an average price target of €4.60. This is based on four Buy and five Hold recommendations. The price target reflects around 47% growth at the current price level.
The Nokia share price has been trading at a loss of 28% so far in 2023.
