Nokia stock collapses after announcing massive layoffs

It is a dark day for the employees of the world's most-recognized phone maker in Espoo, Finland. Stephen Elop, Nokia CEO, announced today that 10,000 positions will be made redundant by the end of 2013. In what is being called part of a strategy to rescale Nokia's operations after terrible losses over the past four quarters, offices in Finland, Germany and Canada will close. Also executives Niklas Savander, Mary McDowell, and Jerri DeVard will step down.

The market reacted swiftly and painfully, driving down Nokia's share price about 18 percent to $2.30. In early trading, Nokia shares dropped their greatest percentage in 11 years.

"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength", Elop says. "We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities".

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"Lightly" but taken with a heavy hand? When did the once great titan of wireless innovation -- inventor of the smartphone and until recently global handset market share leader -- become frail patient on life support?

The fall of Nokia started with the rise of touchscreen smartphones, following Apple's June 2007 launch of iPhone. Nokia could not offer multitouch smartphones that competed. What followed: An innovation heart attack that put the once proud Finnish phone maker in weakened state.

But it's the transition to Windows Phone that has put Nokia at death's door. The February 2011 distribution deal replaced Symbian for Microsoft's mobile OS, and Nokia has lost nothing but market share, customers and money since.

A once proud brand is tarnished. Could it get any more worse before it gets better?

"We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones", Elop says, "while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions".

Nokia will cut smart devices research and development, accelerating a hand-off to Microsoft. The restructuring -- R&D cuts, layoffs and plant closures, among others -- won't be cheap, adding by 2013 1 billion Euros to the 900 million already announced.

Photo Credit: Viorel Sima/Shutterstock

20 Responses to Nokia stock collapses after announcing massive layoffs

  1. TroyGates says:

    Not worried, exact same thing happened with Apple. They were on the brink of collapse and they pulled through. I believe Nokia will do the same.

    • Anurag Kalia says:

      But Apple rebounded miraculously! I love Nokia and I'm pretty worried. It's not that I'm afraid that Nokia has stopped innovating. It brings out superb polycarbonate Lumia and unheard 808 Pureview. But maybe it is not enough! It has rugged phones that just cannot be destroyed. One can just wait for the next generation of phones from Nokia.

      And I'm really holding off any purchases till Nokia brings out Windows phones at even lower price points. I am a broke fan. :D

      • TroyGates says:

         I think we'll see some great innovation from Nokia coming soon. They have the talent and I think we will be blown away with what they come up with.

    • ToeKneeC67 says:

      ...And if you remember the story, Microsoft worked it apple.  At that time it was reported almost 1/2 billion to help Apple pull out.  Of course it was for MS on needed, an OS not aiming at corporate America but a big enough one so no one could call MS a monopoly.  

      • TroyGates says:

         Looks like history will try to repeat itself with Microsoft helping Nokia. Time will tell.

    • extremely_well says:

      Nokia will survive because it'd hurt Microsoft's reputation (and mobile OS, clearly) if it doesn't, and MS can certainly afford to keep throwing cash at Nokia's direction. The success of Lumia on the very-premature v7.5 proved that MS is getting their money's worth.

      But make no mistakes, MS will make sure Nokia and the world know who's wearing the pants around the house (Nokia will do exactly as MS commands them to do) and for that self-demeaning demeanor, Nokia will get bailed out by MS again and again until they finally grow up.

      What will MS gain? First of all, Windows/Phone will become #1 mobile & tablet OS within a couple years. Nothing in the cosmos seems to want or be able to change that fate (and rightfully so I might add -- Google is an Evil Tax Evader and the entire Apple co charity pool is less than 1% of the amount donated to the world by Bill Gates).

      And not less importantly, for a few critical years MS will be able to be a quasi-hardware company a la Apple, making hardware decisions for Nokia, to further their software domination ambition. Anyone who believes Nokia still has autonomy at this point frankly is kidding themselves.

  2. Sparxx2k7 says:

    Guess that contract with m$ didn't sell as many phones as you thought, did it Nokia?

    Good company, bad decisions ....

    • ToeKneeC67 says:

      Not sure what their other choice was.  There isn't much money in Android (HTC just announced it will only make high-end Android phones).  They couldn't stay with their current OS as they were already 3-4 years behind everyone (and slowing dying).

      This isn't the end of Nokia. For all we know the layouts is mostly their OS programmers and supporting staff.

  3. derekaw says:

    Poor NOKIA, I have fond memories of all my NOKIA phones. It really was a bad decision to jump on board the MS/Win Phone train...

  4. lvthunder says:

    Oh come on.  You can't blame this on Windows Phone.  Nokia would be in the exact same position if they had kept Symbian.  I bet most of those layoffs were the software people since Microsoft is providing that now.   Same thing would of happened if Nokia became yet another Android manufacturer.

    • Sparxx2k7 says:

      ....well you can't say it helped either.

      Didn't Mr. CEO proclaim great and wonderful things for the company with this contract?  Layoffs and production shutting down with lost jobs doesn't sound prosperous to me.... 

      ....just sayin'

      • lvthunder says:

         So you expected the switch to turn the company around in what 6-9 months after years and years of decline?  Those wonderful things will happen in the next 9 months or so.

      • Sparxx2k7 says:

         @lvthunder:disqus - well one would expect by law of averages that once your at the bottom, there's nowhere to go but up!  But .... there's always that exception that proves the rule!

    • Cocky_Clock says:

      Keeping symbian was never the plan, they should have gone with android and meego. Wp7 was a failure on the market already, why would anyone choose an OS nobody wants, crazy..

      • lvthunder says:

         By your standards Android was a failure too.  Android was horrible for the first year or two.  Once people start getting used to Metro with Windows 8 I think a lot of people are going to take a closer look at Windows Phone.  Most reviews I've seen of Windows Phone has been pretty positive.  They just don't get the press that Apple and Google get.  Plus I've heard stories of people in the stores being pushed away from Windows Phone from the salesmen.

  5. ilev says:

    Nokia won't survive after the end of this year.  It's Windows phone  which brought it's doom by the hands of Elop "trojan horse" Microsoft.
    Any company parnered with Microsoft in doomed (according to Forbes of last month).
    HTC is loosing due to WP7, LG and Dell bailed out after huge losses on WP7...

  6. ilev says:

    Microsoft 'mulled Nokia buyout, ran away screaming'
     
    http://www.theregister.co.uk/2012/06/11/microsoft_nokia_merger/

  7. alshawwa says:

    its not easy to get back to the market in no time , don't forget the the phone market rounds every 2 and half - 3 years " based on contracts" ,  some people will renew their contract getting the same platform and some people get new platform based on their experience.
    nokia's still have many hopes , microsoft windows phone 7.5 is awesome , but both nokia and microsoft are depending on the carriers advertisement for their phones and alittle advertisements on the web , which is not helpful , they need to do their own ads , att and t mobile cant help alone as only att and truly it sucks " the beta test is over now get the real phone, the first thing came to my mind when i saw the commercial , well excuse me the phone had a problem on lunch so did you move from beta to beta 2? or RC? because truly it wasn't the final release"

    nokia can still boost it self going to android as an OS and just stay in business or be the top android seller cause they can easily do that

  8. Williams Elera says:

    Nokia killed itself by no innovating its phones. They also lacked support to their custumers by no providing properly OS updates. My previous phones were Nokia, now I have a Galaxy Note and I loved it. Another mistake was not improving Symbian and throwing it away in favour of MS. Nokia forgot that phones nowadays are not only used for making/receiving calls but for browsing internet,watching videos,playing games etc consequently they forgot to focus in this aspect and update its technology accordingly.

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