Nokia Is Cutting Up To 10,000 Jobs to Boost 5G Investment
The stock, which has been a favourite among retail investors in recent months.
The stock, which has been a favourite among retail investors in recent months.
Nokia has unveiled plans to axe up to 10,000 jobs as part of a €600 million cost-cutting program aimed at boosting investment in 5G.
The telecom-equipment maker said resetting its cost base would allow it to invest in research and development and long-term growth areas, including 5G, cloud technologies and digital infrastructure.
The stock, which has been a favourite among retail investors and Reddit users in recent months, edged 0.5% higher in premarket trading, while the Finnish-listed shares rose 0.6% on Tuesday.
The company said it expects to lower its cost base by around €600 million by the end of 2023. As part of the restructuring, Nokia said its global workforce would be reduced from 90,000 to between 80,000 and 85,000 employees over the next two years. The company maintained its 2021 outlook.
The U.S.-listed shares are up 10% year-to-date but that doesn’t tell the whole story. The shares climbed 55% in the space of three days at the end of January, prompting the company to release a statement saying it could not explain the rally. The stock has since retreated 52%.
Aside from the volatility, Nokia’s fourth-quarter earnings were stronger-than-expected, driven by 5G margin expansion. Nokia and its Nordic rival Ericsson have benefited from a number of western countries banning China’s Huawei from 5G networks on national security grounds.
However, the Finnish company said its rate of converting its 4G footprint into 5G in 2020 was affected by shortfalls in China and North America. It also lost out to Samsung on a $6.6 billion deal with Verizon. Revenue is expected to fall for a second consecutive year in 2021, Nokia said, citing market share loss and price erosion in North America.
Looking ahead. When Chief Executive Pekka Lundmark, who took charge in August last year, unveiled a new strategy in October, he promised to do “whatever it takes” to lead in 5G. The company’s restructuring plan is evidence of that. After falling behind, Nokia needs to start picking up market share to challenge the likes of Ericsson and Huawei.
Nokia’s capital markets day on Thursday will be the next major event for investors to closely monitor, as Lundmark sets out his long-term strategy and financial outlook. JPMorgan Cazenove analysts said Nokia was likely to come across as confident of turnaround potential. But they said the company was unlikely to “raise the bar significantly” with mid-to-long-term guidance, leaving upside potential if the turnaround proceeds better than expectations.
They rated the stock ‘neutral’ with a target price of $4.30. “We see no reason to turn bullish ahead of the day as we think the turnaround is going to take time,” they said.
Lundmark’s words again were clear on Tuesday as he said “in those areas where we choose to compete, we will play to win.” Words are one thing, it’s now time for action.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
After appeals to cashed-up Australians to stop spending, there’s a little inflationary relief in sight
The rate of inflation in Australia has fallen to 4.9 percent, according to data from the Consumer Price Index. Inflation is down from 5.6 percent in September and a peak of 8.4 percent in December 2022.
The housing, transport and food and non-alcoholic beverages sectors were the strongest contributors to the October increase, which is consistent with trends shown in ABS data from September.
“CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel,” said acting head of price statistics at the ABS, Leigh Merrington. “It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation.”
Food and non-alcoholic beverages rose from 4.7 percent in September to 5.3 percent in the 12 months to October, driven by the rising prices of melons and bananas.
In good news for would-be home builders, new dwelling prices rose 4.7 percent, the lowest annual rise since August 2021, as a result of easing material supply conditions.
While the ABS noted that electricity prices rose 10.1 percent in the year to October, Mr Merrington said it could have been worse, if not for the introduction of the Energy Bill Relief Fund.
“Electricity prices have risen 8.4 per cent since June 2023. Excluding the rebates, Electricity prices would have increased 18.8 per cent over this period,” Mr Merrington said.
The inflation figures come ahead of the final meeting for the year of the RBA Board next Tuesday. The board raised the cash rate by 25 basis points at the November meeting following an increase in the rate of inflation in September.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’