Nokia (NYSE:NOK) stock is in focus on news that the company will eliminate as many as 14,000 jobs, representing up to 16% of its total employees. The firm said that it is making this decision due to the uncertain “timing of the market recovery.”
In conjunction with the announcement, Nokia also reported that its revenue tumbled 15% in the third quarter, excluding currency fluctuations, versus the same period a year earlier. Shares of NOK stock are down more than 7% so far today.
NOK Stock: The Nokia Layoffs
Nokia is reportedly is looking to cut the size of its workforce to between 72,000 and 77,000 employees, helping to reduce its labor costs by between 10% and 15%. The Nokia layoffs are expected to save the firm between 800 million euros and 1.2 billion euros “before inflation” by the end of 2026 compared to 2023. In 2023 and 2024, respectively, the firm expects to save 400 million euros and 300 million euros.
With that said, NOK will have to take on one-time restructuring charges. The company noted in a release:
“The exact scale of the program will depend on the evolution of end market demand. The program is expected to deliver savings on a net basis but the magnitude will depend on inflation […] One-time restructuring charges and cash outflows of the program are expected to be similar to the annual cost savings achieved.”
Nokia expects its cost savings to “primarily be achieved in Mobile Networks, Cloud and Network Services and Nokia’s corporate functions.”
Nokia’s Q3 Financial Results
During the third quarter, Nokia’s North America sales tumbled 45% year-over-year (YOY) as its telecom customers “continued to evaluate their spending and digest inventories.” Elevated interest rates and “macroeconomic challenges” are playing a role in the firm’s struggles, per Business Insider.
Nokia’s earnings per share, excluding certain items, came in at 0.05 euros for the period. However, the firm also reported free cash flow of -400 million euros.
On a positive note, the company did reiterate its full-year sales guidance of between 23.2 billion euros and 24.6 billion euros for 2023. Nokia also expects its full-year comparable operating margin to be between 11.5% and 13%.
“Looking forward, while our Q3 net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in Q4,” said CEO Pekka Lundmark.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.