More Retrenchment at Nokia (June 2012)

The problems facing Stephen Elop at Nokia just seem to get worse. His retrenchment strategy has been notched up another level with the announcement this morning of 10,000 further job losses (that’s about one fifth of the total at Nokia, excluding those who work at the joint venture with Siemens AG). Will this latest, dramatic move be enough to ensure Nokia’s survival?

You can read more about the latest job losses here - I’m sure Nokia’s problems will get further, substantial coverage in the business media over the coming days and weeks. At some stage, Nokia will surely come under scrutiny as a takeover target - I’m sure that the larger private equity firms have been looking closely at the business for months.

Nokia shareholders certainly can’t be happy. As the Bloomberg article points out, Nokia has lost more than $88bn in market value since Apple introduced the iPhone in 2007.

Since Stephen Elop joined as CEO, there have been 40,000 job losses at Nokia which makes his strategy one of the most substantial retrenchments in business history.

A telling quote from Stephen Elop in today’s announcement which summarises the strategic challenge facing Nokia:

“We must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions,”

He goes on to state:

“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength,”

An acknowledgement I feel from Elop that Nokia simply doesn’t have the competitive advantages to be able to compete against the likes of Apple and Samsung. The question is - what are Nokia’s revised “competitive ambitions”. Which niche will they focus on?

There is some interesting evidence in this article that Nokia’s recent new product development simply hasn’t been good enough to enable it to gain the support of the key distributors.