Nokia on Thursday reported a 69 percent drop in profit for the fourth quarter and said it will cut 1,000 jobs. The Helsinki, Finland-based mobile-phone maker blamed the plummeting profit on a lack of demand for its mobile handsets.
“In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility, and credit tightness continuing to impact the mobile communications industry,” said Olli-Pekka Kallasvuo, chief executive at Nokia. “We are taking action to reduce overall costs and to preserve our strong capital structure.”
The news comes on the same day Microsoft said it had to cut 5,000 positions, one day after chipmaker Intel announced it would slash 5,000 jobs, and one week after Motorola said it had to cut 4,000 jobs.
“Volumes were a bit lower than we expected,” said Carolina Milanesi, research director of mobile devices at Gartner. “We predicted (Nokia) sales to be flat quarter on quarter rather than down. I think this reflects not only the current economic climate, but also the relative weakness that Nokia has in the high-end portfolio for markets such as Western Europe.”
“As far as the job cuts go, I think at a time when cost savings is key, it is the right thing to do to look at every aspect [of] your business,” Milanesi added.
A Bleak 2009?
Nokia said the outlook for the first quarter of 2009 looks bleak. Mobile devices will decline by 10 percent in 2009 from 2008, according to Nokia. Volumes in the first quarter of 2009 will also decline faster than the decrease in the first quarters of the past few years.
Net profit for the three months ending Dec. 31 was 576 million euros (US$749 million), below analysts’ expectations of 977 million euros (US$1.3 billion).
The company’s market share dropped to 37 percent in the fourth…