Source: AFP
Nokia, the world's largest mobile phone maker, said Friday it was slashing jobs and joining forces with US giant Microsoft in a major strategy shake-up that left investors disappointed.
In an effort to radically change course and fight off encroaching competition from RIM, Apple and Google, chief executive Stephen Elop said Windows Phone would now serve as Nokia's primary smartphone platform.
Canadian Elop -- a former Microsoft executive who in September became the first non-Finn to lead Nokia -- also announced changes to Nokia's executive board and "substantial" job cuts.
"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward," Elop said.
"There will be substantial reductions in employment in various locations around the world," he told a press briefing in London, without giving further details.
The announcements were met with sharp disappointment on the stock market, with investors expecting more and with more details.
Nokia's stock closed down 14.22 percent to 7.00 euros ($9.48) on a Helsinki stock exchange down 0.70 percent.
Speaking alongside Microsoft chief executive Steven Ballmer, Elop said the mobile phone market had changed from a battle of devices to "a war of ecosystems."
That war has proved difficult for Nokia, which has over the past two years seen increasing competition in the lucrative smartphone sector from Apple's iPhone, Research in Motion's (RIM)Blackberry and phones operated by Google's Android operating system.
As part of its new partnerhsip with Microsoft, Nokia smartphones will be adopting Microsoft's phone platform.
"I think there was a recognition that for something to effectively compete and ultimately win against Android and iPhone, it would require some big muscle," Elop said.
Even though Elop's history with Microsoft had sparked speculation of some kind of cooperation, observers had also said Nokia could join forces with Google to get its hands on the suucessful Android operating system, particularly as Microsoft's platform has also struggled against Android or the iPhone.
Espirito Santo Investment Bank said the Android would have been a better choice.
"We explored the Google ecosystem ... however we felt that we would have difficulty standing out of the crowd," Elop said, adding later that joining with Google would have felt like "giving up".
"I think Nokia feels that with Microsoft, they have better ability to put some input into the situation and development," Handelsbanken analyst Martin Nilsson told AFP.
Nokia itself said the gamble would take some time before it pays off, warning in a separate statement on Friday that 2011 and 2012 will be "transition years" as the company gets the strategy up and running.
In the meantime, it became clear that the company was in for a rocky short term.
"The full-year prospects for its Devices & Services business are subject to significant uncertainties," said the company, refusing to issue annual targets for 2011 and emphasizing the effect on the long-term goals.
In 2013, Nokia said the shake-up would start paying off, and expects their devices and services net sales to grow faster than the market.
Technology research firm Gartner said Wednesday Nokia's global market share had tumbled to 28.9 percent in 2010 from 36.4 percent in 2009, having once topped 40 percent.
In a memo to staff that emerged Wednesday, Elop warned that Nokia was standing on a burning platform," surrounded by a "blazing fire" of competition and that it needed to take radical action if it was to survive.
The company announced 1,800 job cuts last October out of its workforce of more than 132,000 around the world, of which half are in the phone operations.
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Nokia, the world's largest mobile phone maker, said Friday it was slashing jobs and joining forces with US giant Microsoft in a major strategy shake-up that left investors disappointed.
In an effort to radically change course and fight off encroaching competition from RIM, Apple and Google, chief executive Stephen Elop said Windows Phone would now serve as Nokia's primary smartphone platform.
Canadian Elop -- a former Microsoft executive who in September became the first non-Finn to lead Nokia -- also announced changes to Nokia's executive board and "substantial" job cuts.
"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward," Elop said.
"There will be substantial reductions in employment in various locations around the world," he told a press briefing in London, without giving further details.
The announcements were met with sharp disappointment on the stock market, with investors expecting more and with more details.
Nokia's stock closed down 14.22 percent to 7.00 euros ($9.48) on a Helsinki stock exchange down 0.70 percent.
Speaking alongside Microsoft chief executive Steven Ballmer, Elop said the mobile phone market had changed from a battle of devices to "a war of ecosystems."
That war has proved difficult for Nokia, which has over the past two years seen increasing competition in the lucrative smartphone sector from Apple's iPhone, Research in Motion's (RIM)Blackberry and phones operated by Google's Android operating system.
As part of its new partnerhsip with Microsoft, Nokia smartphones will be adopting Microsoft's phone platform.
"I think there was a recognition that for something to effectively compete and ultimately win against Android and iPhone, it would require some big muscle," Elop said.
Even though Elop's history with Microsoft had sparked speculation of some kind of cooperation, observers had also said Nokia could join forces with Google to get its hands on the suucessful Android operating system, particularly as Microsoft's platform has also struggled against Android or the iPhone.
Espirito Santo Investment Bank said the Android would have been a better choice.
"We explored the Google ecosystem ... however we felt that we would have difficulty standing out of the crowd," Elop said, adding later that joining with Google would have felt like "giving up".
"I think Nokia feels that with Microsoft, they have better ability to put some input into the situation and development," Handelsbanken analyst Martin Nilsson told AFP.
Nokia itself said the gamble would take some time before it pays off, warning in a separate statement on Friday that 2011 and 2012 will be "transition years" as the company gets the strategy up and running.
In the meantime, it became clear that the company was in for a rocky short term.
"The full-year prospects for its Devices & Services business are subject to significant uncertainties," said the company, refusing to issue annual targets for 2011 and emphasizing the effect on the long-term goals.
In 2013, Nokia said the shake-up would start paying off, and expects their devices and services net sales to grow faster than the market.
Technology research firm Gartner said Wednesday Nokia's global market share had tumbled to 28.9 percent in 2010 from 36.4 percent in 2009, having once topped 40 percent.
In a memo to staff that emerged Wednesday, Elop warned that Nokia was standing on a burning platform," surrounded by a "blazing fire" of competition and that it needed to take radical action if it was to survive.
The company announced 1,800 job cuts last October out of its workforce of more than 132,000 around the world, of which half are in the phone operations.
