Nokia Oyj (NOK1V), which was overtaken by Apple Inc. (AAPL) as the largest maker of mobile phones last quarter, will eliminate 7,000 jobs and transfer its Symbian software development to Accenture Plc (ACN) in the Finnish company’s biggest reorganization in two decades.
Accenture, the second-largest technology-consulting company, will take on 3,000 Nokia workers in China, Finland, India, the U.K. and the U.S. by the end of this year, the companies said today. Nokia, which is switching to Microsoft Corp.’s Windows Phone 7, will cut an additional 4,000 positions.
Symbian smartphones have struggled to keep up with the iPhone and handsets based on Google Inc. (GOOG)’s Android system. Nokia’s stock has lost about two thirds of its value since Apple introduced the iPhone in 2007, raising consumer expectations for handsets that can surf the Web and show movies to be simple to operate. Chief Executive Officer Stephen Elop said today he’ll keep all Finnish sites open with Nokia’s headquarters to remain in the country.
“The big surprise is Accenture,” Ben Wood, a London-based analyst at CCS Insight, said in a phone interview. “Nokia is moving quickly to transition Symbian out of the company in order to ensure complete focus on Windows Phone 7. This is the beginning of the long and painful journey.”
Espoo-based Nokia rose as much as 24 cents, or 4 percent, to 6.20 euros and was up 3 percent at 6.14 euros as of 5:11 p.m. in Helsinki, giving the company a market value of 23 billion euros ($33.8 billion). It has fallen 25 percent since the Feb. 11 alliance with Microsoft. Accenture added 0.5 percent to $56.98 in New York.
The 7,000 positions account for almost 12 percent of Nokia’s workforce, excluding those employed at a venture with Siemens AG and at the Navteq maps division.
“The numbers are broadly in line but a bit more than I expected,” said Heikki Kauppi, chairman of the Federation of Professional and Managerial Employees, which represents more than 8,000 of Nokia’s 13,000 employees in its category in Finland, in an interview. “I’m generally satisfied with Nokia’s good effort in investing in the reemployment of those laid off.”
The Pro union, which represents office workers, said in a statement that it is “satisfied at this stage with Nokia’s efforts to assure continuing work for the personnel.”
Windows Phone 7
Under today’s agreement, Accenture will also work for Nokia on projects based on Windows Phone 7. The deal will help Dublin-based Accenture, which employs more than 215,000 people and also offers outsourcing services, to offer clients new mobile and software services, said Marty Cole, head of Accenture’s Communications and High Tech unit.
Accenture reported sales of $21.6 billion in the fiscal year ended Aug. 31. In 2009, the company bought Nokia’s professional services unit that provides engineering and support of the Symbian operating system to mobile-device manufacturers and service providers.
Elop, 47, is seeking to restore Nokia’s smartphone prospects after deciding that its own Symbian and MeeGo systems couldn’t keep up with rivals’ phones.
First-quarter net income declined 1.4 percent to 344 million euros, Nokia said last week. Handset revenue rose 6.4 percent to 7.09 billion euros ($10.4 billion), surpassed for the first time by iPhone sales of $12.3 billion in the period.
Nokia’s smartphone market share fell to 30.8 percent at the end of last year, 20 percentage points lower than the level at the iPhone’s introduction, according to researcher Gartner Inc.
CEO Elop said last week that he plans to slash 1 billion euros in expenses at the handset business by 2013.
The 4,000 job cuts will affect mainly Denmark, Finland and the U.K. and will take place by the end of 2012, Nokia said. Those reductions include 1,400 workers in Finland, Elop said at a press conference in Espoo. Nokia will close several sites outside Finland, including a development unit in Copenhagen and its U.S. base in White Plains, New York, he said. No more job cuts are planned, the CEO said.
About 700 jobs in the U.K. will go, the local Unite union said in a statement, adding that it will take part in a “concerted campaign” to halt the job losses.
“We have new clarity around our path forward,” Elop said. “We are working closely with our employees and partners to identify long-term re-employment programs for the talented people of Nokia.”
Nokia added about 5,000 employees in the last year, including about 1,000 at Navteq and about 2,000 at Nokia Siemens Networks, the venture with Siemens.
Nokia’s headcount declined by 31 percent between 1990 and 1993, according to annual reports, as the company shed units making rubber products and computers. The handsets organization has more than doubled in size since 1999, to 58,642 people at the end of last year. The company reported a total headcount of 130,951 as of March 31, 2010.
“Nokia’s announcements today show that the worst fears regarding employees have not been realized,” Economy Minister Mauri Pekkarinen and Employment Minister Anni Sinnemaeki said in a statement. “However Nokia’s decision will have significant consequences for research and product development in the information technology sector in Finland.”
To contact the reporter on this story: Diana ben-Aaron in Helsinki at email@example.com
To contact the editor responsible for this story: Kenneth Wong in Berlin at firstname.lastname@example.org