The 5 biggest job cutters in wireless in 2012
While the overall economy is in a much better place than it was during the deepest part of the recent recession, many companies are still feeling the aftershocks of the downturn. During the past year some wireless companies announced significant layoffs. Some of these cuts sprang from poor economic conditions and the need to cut costs, while others were the direct result of companies shifting their strategies toward different or new products.
FierceWireless has compiled this list of the top five biggest wireless layoffs in the past year. These job cuts have been primarily at two kinds of companies: network infrastructure vendors and struggling handset makers.
Job cuts are often justified as a painful but necessary decision to change the direction of the company and make it a leaner, more productive entity. Sometimes that's true, but not always. Here is a tour of the biggest job cuts in wireless.
Google/Motorola - 4,000 jobs
Google (NASDAQ:GOOG) said in August that its Motorola Mobility subsidiary would slash around 4,000 jobs, or 20 percent of its workforce. The move came just three months after Google's $12.5 billion acquisition of Motorola closed. The search giant also said that "Motorola plans to close or consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio--shifting the emphasis from feature phones to more innovative and profitable devices."
The job cuts, while stark, were somewhat expected. Google executives have emphasized that the company would be focused on a slimmer portfolio of devices than it had in the past. Google has also taken steps to reshape Motorola--40 percent of Motorola's former vice presidents are gone and the company plans to move from its longtime headquarters in Libertyville, Ill., to a new office in downtown Chicago's Merchandise Mart area.
After losing money for 14 of the last 16 quarters, Google is making the changes to "return Motorola's mobile devices unit to profitability," the company said in a Securitas and Exchange Commission filing.
But that's not all. In October Google said it expects more job cuts and higher costs as part of the restructuring of Motorola.
As the restructuring goes on, Motorola is likely going to continue to weigh on Google's earnings. In mid-October Google failed to meet analysts' expectations for the third quarter of 2012, its first with Motorola fully integrated into its ranks. Much of this could be attributed to Motorola, which had an operating loss of $527 million, a huge increase from the $41 million it recorded in the year-ago quarter.
Research In Motion – 5,000 jobs
In June Research in Motion (NASDAQ:RIMM) said it would cut 5,000 of its 16,500 employees as it worked to stay afloat amid its transition to BlackBerry 10. The job cuts are designed to save RIM $1 billion by the end of its fiscal 2013 year. Even worse, these 5,000 job cuts came on top of the 2,000 job cuts RIM ordered in July 2011,
RIM CEO Thorsten Heins and CFO Brian Bidulka called the cuts difficult but necessary as the firm transitions to BlackBerry 10, the platform on which it is staking its future. The cuts are part of what RIM calls its Cost Optimization and Resource Efficiency (CORE) program.
Heins said in late September that the company was on track to achieve its cost saving target. The program looks at every aspect of RIM's business, which Heins said will allow it to "invest more wisely, become more efficient and build a business culture that can drive financial performance for the new RIM." A big part of the program is cutting manufacturing sites, with RIM moving from 10 manufacturing sites down to three. Through the first half of its fiscal year RIM had realized $350 million in saving from the program.
Despite making progress, RIM is not out of the woods yet. The company said it expects to report an operating loss in its fiscal third quarter as it completes its cost cutting program. Yet hope may be on the horizon: RIM said it will hold a launch event Jan. 30 to officially unveil its BlackBerry 10 platform, which more than 50 carriers are testing.
Alcatel-Lucent - 5,490 jobs
Alcatel-Lucent (NASDAQ: ALU) said in July it would cut roughly 5,000 jobs across all regions as part of a new restructuring program, called the "Performance Program." The job cuts at Alcatel-Lucent are the latest in a series of restructuring efforts by a company that has struggled to record consistent profits since the 2006 merger that created the vendor.
The new restructuring plan for Alcatel-Lucent will see it cut 6.4 percent of its 78,000 total employees. Alcatel-Lucent has said it expects total cost savings of around $1.6 billion by the end of 2013 due to the cuts and other cost-saving measures. Interestingly, Alcatel-Lucent is also reviewing its managed services contracts with carriers, and has said it could exit a significant number of them in order to reduce costs.
In September, the vendor shook up its structure yet again and said that as part of the performance program CFO Paul Tufano will also take on the newly created role of COO to spearhead the company's plan to restructure its operations. Under the new business structure, Alcatel-Lucent will focus on four core areas:
- Wireless, where the vendor will focus on serving its existing customer base in North America, China and EMEA.
- Core Networks, for both IP and optical networks.
- Fixed Networks, where it will invest further and create synergies with small cell deployments
- Platforms, where the company will focus on its using its High Leverage Network capabilities in unified software platforms for control, optimization and network analytics.
In late October Verwaayen said that so far this year the company has saved $582 million. However, Tufano said the company is considering unspecified asset sales to provide liquidity and bolster its balance sheet.
Nokia - 10,000 jobs
Nokia (NYSE:NOK) announced in mid-June that it would cut 10,000 jobs by the end of 2013, part of an effort to streamline its operations, especially in its mammoth devices and services unit. It was a moment of upheaval for the company, which is in the midst of transforming its business, most notably by moving to Microsoft's (NASDAQ:MSFT) Windows Phone as its primary smartphone platform. The announced job cuts also accompanied other changes: Nokia announced a shakeup of its management team; the sale of its Qt cross-platform application development framework to IT services firm Digia; and a long-expected divestment of its luxury mobile phone unit Vertu to private equity firm EQT.
"Our duty is above all to ensure that Nokia's competitiveness is restored," Nokia's chairman Risto Siilasmaa told the Finnish TV broadcaster YLE.
Nokia executives have justified the cuts as painful but necessary steps to save costs at a time when Nokia's overall handset sales have been falling. So far, however, the strategy has yet to pay off financially: Nokia reported a net loss of $1.27 billion in the third quarter, wider than the net loss the company reported a year ago but down slightly from the net loss in the second quarter.
Nokia Siemens Networks - 17,000 jobs
When Nokia Siemens Networks announced in November 2011 sweeping changes to its operations that would see up to 17,000 jobs cuts by the end of 2013, not many industry observers were surprised. The number of jobs cut are huge but so are NSN's problems--NSN owners Nokia (NYSE:NOK) and Siemens failed to offload their struggling joint venture onto private equity buyers. The vendor was squeezed at the high end by successful giants like Ericsson (NASDAQ:ERIC) and on the low end by low-cost Chinese suppliers like Huawei and ZTE. NSN said it would refocus on mobile broadband as its main business in a bid to save $1.3 billion and redefine its priorities.
Nokia Siemens subsequently sold its wireline business to Adtran and its WiMAX business NewNet Communication Technologies, which is backed by private equity firm Skyview Capital. The vendor also sold its microwave business unit to DragonWave. NSN said the cuts were painful but necessary, and as it shed units it could not afford to keep, the company started making progress. Nokai Siemens CEO Rejeev Suri said in September that the company was about six months ahead of its restructuring plans, and confirmed that the vendor was in talks with various companies to sell its business support systems (BSS) unit.
In the third quarter of 2012, NSN's transformation finally started to produce positive financial results. The company posted a record non-IFRS profit of around $410.5 million and grew its cash balance for a fourth straight quarter. "The strategy is starting to come through in the numbers," Rick Corker, the head of NSN's North American business, recently told FierceWireless.