Nokia sells Vertu, cuts 10,000 jobs and restructures management
| by Shayne Rana |
In what seems like a bid to try and recover all that the Finnish company is losing in their drastically declining market share and stocks, Nokia seems to be working on a major overhaul of company structure and cleaning house. In a recent announcement, as a cost cutting measure, Nokia has decided to render about 10,000 of their employed work force redundant. The number includes those in their global work force. Nokia is beginning the process of engaging with employee representatives in accordance with country-specific legal requirements.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," added Elop. "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."
Stephen Elop making big changes
They said in a statement that the company remains focused on the unique experiences offered by its smartphones and feature phones, including an increased emphasis on location-based services.
"We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia," said Stephen Elop, Nokia president and CEO. "We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, 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 plans to:
In further action to help improve their current state, the company has also agreed to terms for EQT VI, part of the leading private equity group in Northern Europe, to acquire Vertu. Nokia’s Vertu brand has been one of the global leaders in luxury mobile phones for a long time.
"With its strong brand, undisputed category leadership and attractive growth outlook, Vertu fits well with EQT VI's investment strategy. EQT VI is excited about the opportunity to develop Vertu as a standalone company and plans to drive the development of the luxury mobile phone category through significant investments in retail expansion, marketing and product development," said Jan Ståhlberg, Partner at EQT Partners, Investment Advisor to EQT VI.
"This is a logical next step in the evolution of Vertu as the world leader in luxury mobile products," said Perry Oosting, President of Vertu. "Since Vertu began in 1998, our business has grown every year, due to the efforts of our talented workforce and the unique products and services we offer to our customers. We believe that EQT VI will position Vertu to continue to grow and lead in our marketplace."
Vertu is out
The transaction, the terms of which are confidential, is expected to close during the second half of 2012, subject to customary regulatory approvals and closing conditions. Nokia will retain a 10% minority shareholding in Vertu.
Nokia has even taken drastic measures to “reboot” their company set up by announcing big changes in their management system. These cost reduction measures are designed to return Nokia's Devices & Services business to sustainable non-IFRS operating profitability as soon as possible.
"Nokia is significantly increasing its cost reduction target for Devices & Services in support of the streamlined strategy announced today," said Timo Ihamuotila, executive vice president and CFO. "With these planned actions, we believe our Devices & Services business has a clear path to profitability. Nokia intends to maintain its strong financial position while proceeding aggressively with actions aimed at creating shareholder value."
Nokia aims to further develop its Series 40 and Series 30 devices, and invest in key feature phone technologies like the Nokia Browser, aiming to be the world's most data efficient mobile browser and take on the likes of Opera.
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