Despite Microsoft Partnership, Nokia Continues to Fade in Race With Rivals

The company, based in Espoo, Finland, said it planned to reduce annual operating expenses in its core devices and services business by 1 billion euros, or $1.44 billion, to 4.65 billion euros, or $6.72 billion, by the end of 2013.

“This reduction is expected to come from a variety of different sources and initiatives,” the company said, “including a reduction in the number of employees and normal personnel attrition, a reduction in the use of outsourced professionals, reductions in facility costs, and various improvements in efficiencies.”

Stephen Elop, the Microsoft executive whom Nokia hired to be chief executive last September, said the company would begin negotiations with its work force in Finland and elsewhere next week. Before those talks, Mr. Elop said, Nokia will not speculate on the number of jobs it may eventually cut.

“Speculation on the exact numbers and the timing of those numbers is best postponed until we discuss this with” worker representatives, Mr. Elop said in a conference call with financial analysts.

Some employees will be able to move into other jobs with Nokia, Mr. Elop said, and Nokia may have openings as a result of its partnership with Microsoft. Because of those opportunities, Nokia said it could guarantee employment to its existing employees through this year.

Nokia also confirmed that it had signed its agreement with Microsoft to obtain the Windows operating system for Nokia’s smartphones. The two companies announced the partnership on Feb. 11. Since then, Nokia’s stock price has fallen by about a third.

The cost-cutting initiative came as Nokia lost its lead in cellphone revenue to Apple, the research firm Strategy Analytics said on Thursday, according to Reuters.

Nokia’s phone revenue fell to $9.4 billion in the last quarter, while Apple’s revenue from the iPhone increased to $11.9 billion, the research firm said.

“With strong volumes and high wholesale prices, the PC vendor has successfully captured revenue leadership of the total handset market in less than four years,” Alex Spektor, an analyst, said.

Nokia also reported Thursday that its profit fell slightly, to 344 million euros ($497 million) in the first quarter from 349 million euros ($504 million) in the period a year earlier.

Sales rose 9.2 percent, to 10.4 billion euros ($15.0 billion), in large part because of gains in Latin America and China, where Nokia’s sales rose 29 percent and 30 percent respectively. Sales in North America fell 36 percent, and sales in Europe fell 5 percent.

Nokia said its sales of smartphones rose 13 percent in the quarter, to 24.2 million units from 21.5 million. The market grew 74 percent over all during the same time, Francisco Jeronimo, an analyst with the International Data Corporation in London, said.

On top of that, the average selling price fell 6 percent in the same period, to 147 euros from 155 euros a year earlier, Nokia said.

The company said it had sold 108.5 million cellphones of all types during the quarter, 1 percent more than a year ago. Yet its global share of the cellphone market fell to 32 percent from 34 percent a year ago, according to I.D.C.

Mikko Ervasti, an analyst at Evli Bank, a private bank in Helsinki, said the cuts in operating expenses were needed to bring Nokia in line with its cellphone peers, like Apple, which on average spend only half or even less on research and development than Nokia does.

Mr. Ervasti said the cost-cutting could translate into 6,000 fewer jobs in its cellphone research and development work force, or roughly 38 percent of Nokia’s total staff for mobile phones. Those employees are now working in Finland, China, India, Germany, England, Denmark and San Diego.

“These cuts were needed and are in line with what the market was expecting,” Mr. Ervasti said. “This is a direct consequence of the Microsoft agreement, and Nokia’s own need to trim expenses.”

 

Despite Microsoft Partnership, Nokia Continues to Fade in Race With Rivals

 

The company, based in Espoo, Finland, said it planned to reduce annual operating expenses in its core devices and services business by 1 billion euros, or $1.44 billion, to 4.65 billion euros, or $6.72 billion, by the end of 2013.

“This reduction is expected to come from a variety of different sources and initiatives,” the company said, “including a reduction in the number of employees and normal personnel attrition, a reduction in the use of outsourced professionals, reductions in facility costs, and various improvements in efficiencies.”

Stephen Elop, the Microsoft executive whom Nokia hired to be chief executive last September, said the company would begin negotiations with its work force in Finland and elsewhere next week. Before those talks, Mr. Elop said, Nokia will not speculate on the number of jobs it may eventually cut.

“Speculation on the exact numbers and the timing of those numbers is best postponed until we discuss this with” worker representatives, Mr. Elop said in a conference call with financial analysts.

Some employees will be able to move into other jobs with Nokia, Mr. Elop said, and Nokia may have openings as a result of its partnership with Microsoft. Because of those opportunities, Nokia said it could guarantee employment to its existing employees through this year.

Nokia also confirmed that it had signed its agreement with Microsoft to obtain the Windows operating system for Nokia’s smartphones. The two companies announced the partnership on Feb. 11. Since then, Nokia’s stock price has fallen by about a third.

The cost-cutting initiative came as Nokia lost its lead in cellphone revenue to Apple, the research firm Strategy Analytics said on Thursday, according to Reuters.

Nokia’s phone revenue fell to $9.4 billion in the last quarter, while Apple’s revenue from the iPhone increased to $11.9 billion, the research firm said.

“With strong volumes and high wholesale prices, the PC vendor has successfully captured revenue leadership of the total handset market in less than four years,” Alex Spektor, an analyst, said.

Nokia also reported Thursday that its profit fell slightly, to 344 million euros ($497 million) in the first quarter from 349 million euros ($504 million) in the period a year earlier.

Sales rose 9.2 percent, to 10.4 billion euros ($15.0 billion), in large part because of gains in Latin America and China, where Nokia’s sales rose 29 percent and 30 percent respectively. Sales in North America fell 36 percent, and sales in Europe fell 5 percent.

Nokia said its sales of smartphones rose 13 percent in the quarter, to 24.2 million units from 21.5 million. The market grew 74 percent over all during the same time, Francisco Jeronimo, an analyst with the International Data Corporation in London, said.

On top of that, the average selling price fell 6 percent in the same period, to 147 euros from 155 euros a year earlier, Nokia said.

The company said it had sold 108.5 million cellphones of all types during the quarter, 1 percent more than a year ago. Yet its global share of the cellphone market fell to 32 percent from 34 percent a year ago, according to I.D.C.

Mikko Ervasti, an analyst at Evli Bank, a private bank in Helsinki, said the cuts in operating expenses were needed to bring Nokia in line with its cellphone peers, like Apple, which on average spend only half or even less on research and development than Nokia does.

Mr. Ervasti said the cost-cutting could translate into 6,000 fewer jobs in its cellphone research and development work force, or roughly 38 percent of Nokia’s total staff for mobile phones. Those employees are now working in Finland, China, India, Germany, England, Denmark and San Diego.

“These cuts were needed and are in line with what the market was expecting,” Mr. Ervasti said. “This is a direct consequence of the Microsoft agreement, and Nokia’s own need to trim expenses.”

 

Robert Mugabe Hounds Rivals in Zimbabwe, Parties Say

Ever since the two wings of the Movement for Democratic Change, the party founded to fight Mr. Mugabe’s rule, accepted a power-sharing arrangement with the government in 2008, about 30 of their 109 members of Parliament have been arrested at one point or another, with some of them being taken into court shackled in leg irons, according to human rights lawyers and the M.D.C.

“They’re trying to force us out, and they’re not sophisticated enough to hide it,” Elton Mangoma, a cabinet member and M.D.C. leader who helped negotiate the troubled power-sharing deal, said between two recent stints in jail.

The latest arrest of an opponent came on Friday, despite warnings from Zimbabwe’s neighbors that such detentions must stop. The police accused Moses Mzila Ndlovu, co-minister for national healing, of attending a meeting held without their authorization. It was a memorial prayer service for the thousands of civilians from the Ndebele minority slain in the early years of Mr. Mugabe’s 31-year rule.

As Mr. Mugabe, 87, seeks another term, his political anxieties are showing, and not just in the arrests of his opponents. He is also deeply worried about disloyalty in his own party, ZANU-PF, and leaks from insiders about his health and his party’s violent political strategy for the elections it is demanding sometime this year.

At a funeral last Thursday for a leader of his vast spy service, Mr. Mugabe complained about party members who “run to our enemies to tell them the details of our meetings.” And he warned these “sellouts” that intelligence agents were watching them.

There are now two aggressive new newspapers in Zimbabwe challenging the state’s version of reality, and as an ill-concealed battle rages in Mr. Mugabe’s own party to succeed him, some ZANU-PF officials are maneuvering to advance their own interests.

“Now that he’s clearly old, the different factions are moving in,” said Dewa Mavhinga, regional coordinator for the Crisis in Zimbabwe Coalition, an alliance of more than 300 civic groups. “It’s clear there has to be thinking post-Mugabe, most so within his own party.”

The president’s allies are striking out at those who challenge him. Even a sardonic sense of humor can be a criminal offense if the punch lines zing Mr. Mugabe, who controls the police, prosecutors and prisons.

Douglas Mwonzora, an M.D.C. leader who lectures on Roman law at the University of Zimbabwe, recently stood in court, gazing at the omnipresent portrait of Mr. Mugabe. Mr. Mwonzora was handcuffed, shackled and clothed in prison-issue khaki short pants (no underwear allowed), facing a charge, which he denied, of inciting public violence. The magistrate had not arrived yet, so Mr. Mwonzora said he respectfully addressed the portrait.

“How are you, father?” he asked Mr. Mugabe, widely rumored to have prostate cancer. “How is your health?”

People in the courtroom burst out laughing — but on April 8 the police charged Mr. Mwonzora with insulting the president, an offense punishable by up to a year in prison.

Mr. Mwonzora, who heads Parliament’s constitution-making committee for the M.D.C., had already been jailed almost four weeks in February and March before being released on $50 bail. He had slept for days on the concrete floor of a cell, next to a toilet. For weeks, he shared another cell with inmates accused of rape and murder — a cell earlier inhabited by an M.D.C. senator.

“?‘That’s where we put M.D.C. M.P.’s,’?” Mr. Mwonzora said prison guards told him.

The menacing buildup to the voting seems like a replay of the violent, rigged elections that have plagued Zimbabwe over the past decade. But calls by ZANU-PF officials for the arrest of the M.D.C.’s leader, Prime Minister Morgan Tsvangirai, seem to have galvanized South Africa’s president, Jacob Zuma — the regional mediator in Zimbabwe’s political crisis — to demand a halt to political arrests and violence.

The efforts to goad Mr. Tsvangirai are many. The police have banned his rallies and arrested his drivers for using blue beacon lights without authorization. The state-controlled Sunday Mail newspaper published rumors that Mr. Tsvangirai, a widower, was sleeping around, accompanied by a photograph of him being hugged by someone the paper described as “that unidentified white woman.”

A reporter in Zimbabwe contributed reporting.