Nokia chief warns of post-merger job cuts and headwinds in infrastructure market

Nokia CEO Rajeev Suri said job cuts are inevitable following the company's merger with Alcatel-Lucent, but that it is too soon to offer specific details on how many staff will go.

The vendor's chief executive told Yle, Finland's national public broadcaster, that the company is still working out the details of staff reductions, but conceded some overlapping roles in the networks, sales and marketing, and procurement divisions would be shed.

While Nokia committed to safeguard jobs in France as part of a deal to secure the backing of the country's government for the Alcatel-Lucent transaction, Suri told Yle that the government is aware some personnel changes in the market will happen.

Suri's key objective in terms of integrating Alcatel-Lucent's operations is to not repeat the mistakes the company made in its previous merger with Siemens, which the CEO blamed on internal politics, Yle reported.

The CEO's comments came after Nokia and Alcatel-Lucent announced their final sets of earnings figures as individual companies, covering the fourth quarter and full year 2015.

In the fourth quarter, Nokia increased its net profit 54 per cent year-on-year to €499 million ($563 million) after a 3 per cent annual rise in net sales to €3.6 billion. However, the bulk of the vendor's sales growth came from its Technologies business, which registered a 170 per cent rise year-on-year to €403 million, compared to a 5 per cent drop in sales at the Networks business to €3.2 billion. Fourth quarter earnings included a €1.1 billion gain on the sale of its Here navigation business to a consortium of German auto makers.

In the full year 2015 Nokia reported a 56 per cent drop in net profit to €1.1 billion after registering single digit growth in net sales -- up 6 per cent over 2014 at €12.4 billion. Growth was again driven by the Technologies business, which increased sales 77 per cent year-on-year to €1.02 billion. The vendor's Networks division sales increased 3 per cent through 2015, to €11.4 billion.

Suri warned that the company faces headwinds in 2016, including a slowdown in LTE network sales in China, but suggested the opening quarter would be the most challenging.

Alcatel-Lucent grew net income 388 per cent year-on-year in the fourth quarter to €659 million, as revenue increased 13 per cent annually to €4.1 billion.

In the full year, the vendor overturned a net loss of €118 million in 2014 with a profit of €361 million in 2015. Revenues increased 8 per cent year-on-year to €14.2 billion.

For more:
- see this Yle report
- view Nokia's earnings announcement
- see Alcatel-Lucent's earnings release

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