Wireless

Nokia said Friday that a streamlining effort could result in the elimination of as many as 330 positions from its research and development staff, or about 2 percent of its global R&D workforce.

Microelectronics research at Nokia.

(Credit: NOkia)

The changes will likely hit up to 230 workers in the company's Oulu site in Finland and roughly 100 at its Copenhagen site. Nokia said it plans to offer voluntary severance packages to the affected workers and to find alternative jobs for as many people as possible.

The company currently employs more than 17,000 workers in its R&D business. It has 2,000 employees at the Oulu facility and 1,000 in Copenhagen.

Though Nokia still holds the top spot in the smartphone arena, its dominance has been eroded by competition from the likes of Apple and Research In Motion. A recent In-Stat report found that Nokia's share of the smartphone market had dropped to 35 percent in this year's second quarter compared with 50 percent in the prior year's quarter.

Another report from Strategy Analytics revealed that Apple had surpassed Nokia in cell phone profits during the third quarter, the first time that Nokia had fallen to second place.

Nokia's third-quarter results showed a net loss of $832 million, while sales dropped around 20 percent. Nokia Siemens, the network equipment maker run by Nokia and Siemens, has also been a drag on its owners, recently announcing its own layoffs and cost cuts as a result of its weak performance.

Sprint Nextel said it will cut 2,000 to 2,500 positions in the fourth quarter in an effort to save $350 million.

The cuts will be completed by December 31.

According to a statement, Sprint will cut jobs across the company, including its wholesale unit and contractors. The company said the cuts won't impact customer service, something the Sprint has been trying to improve. Nevertheless, Sprint said call volume has decreased so it has discontinued 27 call centers.

Sprint will take a fourth quarter charge of $60 million to $80 million. The layoff news comes as Sprint will reportedly sink another $1 billion into Clearwire.

Read the original post of "Sprint to cut 2,000 to 2,500 jobs" at ZDNet's Between the Lines.

Damaged by lower sales, huge operating losses, and a falling market share, Nokia Siemens Networks is pinning its hopes on a major reorganization.

The network equipment maker, jointly owned by Nokia and Siemens, announced Tuesday that it will lay off 5,700 employees and cut its five business units to three as part of a plan to slash expenses by 500 million euros ($740 million) by the end of 2011.

The layoffs will represent around 7 percent to 9 percent of the company's 64,000 global employees and is likely to be felt across all countries in which Nokia Siemens has a presence. The company did not state which jobs would be affected but did say that any disruption to sales positions that deal directly with customers should be limited.

The three new revamped business units are expected to launch on January 1 and will include Business Solutions, Network Systems, and Global Services.

"As our customers make purchasing decisions, they want a partner who engages in issues well beyond a traditional discussion of technology," said Rajeev Suri, chief executive officer of Nokia Siemens Networks, in a statement. "Business models, innovation, growth and transformation are now very much front and center when it comes to the selection of a technology partner - and our planned new structure will position us well in this changing market."

The company said it's also looking at potential new acquisitions and partnerships that could enhance its product line or expand its customer base. In June, Nokia Siemens bought Nortel's wireless technology for $650 million.

"We recognize that we are operating in a market where customer needs are evolving fast," said Mika Vehvilainen, chief operating officer of Nokia Siemens Networks, in a statement. "We see acquisitions and expanded partnering as important tools to help meet these needs in the fastest, most efficient way possible."

Formed in early 2007, Nokia Siemens has seemed cursed from the start. Its launch was initially delayed a few months due to a bribery scandal involving several former Siemens executives.

The new company had hardly gotten off the ground when it announced it wouldn't meet financial expectations. And it's struggled since then, hurt by the economic downturn and increasing competition.

Third-quarter sales fell 21 percent to 2.8 billion euros, while its operating loss widened to 1.1 billion euros. Parent Nokia was recently forced to spend 908 million euros to write down the value of the deteriorating business.

Will the touch-screen Idou phone, expected in the fourth quarter of this year, come too late for Sony Ericsson? This is a deciding year for the company, according to a Gartner analyst.

(Credit: Sony Ericsson)

Sony Ericsson plans to lay off a further 2,000 employees in the wake of deeper quarterly financial losses.

The staff cuts, announced on Friday, add to the 2,000 cuts the handset maker outlined in July. They came the same day that Sony Ericsson reported its first-quarter earnings results, which showed that the company had a pretax loss of 358 million euros ($467 million) for the first three months of 2009. The company's earnings slipped into the red in the third quarter of 2008, and its losses have deepened ever since.

"As expected, the first quarter of this year has been extremely challenging for Sony Ericsson, due to continued weak global demand," Sony Ericsson President Hideki "Dick" Komiyama said in a statement. "We are aligning our business to the new market reality, with the aim of bringing the company back to profitability as quickly as possible."

Komiyama indicated that there would be more cost cuts to come. "The management intends to pursue an additional cost-saving program targeting a further annual operating-expense reduction of 400 million euros, to be completed by mid-2010," he said.

Sony Ericsson estimates that it will lay out 200 million euros in restructuring charges associated with the latest staff reduction. It did not give a business unit and geographical breakdown of the latest layoff. However, a company representative told ZDNet UK on Friday that the cuts, as in the previous layoff round, would affect both permanent employees and contractors.

Sony Ericsson, which has seen losses worsen for the past three consecutive quarters, now has a declared net cash position of 1.1 billion euros. Asked whether this trend means that the handset maker might run out of money by the end of the third quarter of 2009, a company representative responded, "That, perhaps, could be one conclusion."

"We're obviously reviewing the situation regularly," the representative told ZDNet UK on Friday, adding that parent companies Sony and Ericsson "have always maintained their commitment to the joint venture."

Sony Ericsson noted that it now has a 6 percent share of global handset market--down two percentage points, or 25 percent, since the previous quarter. It also said it expects the global handset market to contract by 10 percent over the course of 2009. That prediction is precisely in line with estimates made by Nokia on Thursday.

In February, Sony Ericsson announced an Entertainment Unlimited strategy to integrate various elements, such as imaging and media, into a new generation of handsets. The first new model will be the touch-screen Idou handset, expected in the fourth quarter of this year.

Idou is "certainly a step in the right direction for Sony Ericsson, but one cannot help but wonder if it will be too little, too late, given (that) it will only be on the market at the end of the year," Gartner analyst Carolina Milanesi said in a statement on Friday. In January, Milanesi predicted that 2009 would be "a deciding year" for Sony Ericsson.

Sony Ericsson's representative noted that the company intends to focus this year on "high-end open-(operating system) devices"--a reference to the company's ongoing work on an Android phone and its membership of the Symbian Foundation--and on "(tapping) into the 3G market opportunity in such emerging markets as China."

David Meyer of ZDNet UK reported from London.

Motorola announced plans Monday to record $229 million in charges related to layoffs during the first quarter.

In a filing with the SEC, Motorola said that it will have cut 5,600 employees in the first quarter, completing the 7,000 layoffs it has announced since October of 2008. In exchange for letting those employees go, Motorola will have to pay them $216 million as well as record an additional $13 million in charges related to the exit of certain businesses.

Motorola has a goal for reducing its 2009 annual costs by $1.5 billion. The company's handset division has languished in the year since it announced plans to seek a buyer for that group. No one stepped forward, prompting Motorola to delay the sale, and product development seems to have stayed home as well; Motorola handsets were practically absent from CTIA 2009.

Nortel Networks will be cutting an additional 3,200 jobs, or more than 10 percent of its workforce worldwide over the next several months as the company tries to survive a bankruptcy restructuring.

Nortel, which makes telecommunications equipment, had already announced 1,800 job cuts last year. The company currently employs about 30,000 people around the world. In the 1990s and early 2000s, during the telecom boom, Nortel employed about 95,000 workers. And at one point in 2000 the company accounted for one-third of the market value on the entire Toronto Stock Exchange, the Associated Press reported.

But the past several years have been difficult for Nortel as it has struggled to regain its footing in a changing telecommunications market. The worldwide recession has only worsened Nortel's problems. And the company filed for bankruptcy protection in the U.S. and Canada last month.

When it filed for bankruptcy protection, Nortel had about $2.4 billion in cash. The company hoped it could use the cash "to preserve its liquidity and fund operations during the restructuring process." But The Wall Street Journal reported earlier that court documents show Nortel has liabilities of $11.8 billion, but only has consolidated assets of $11.6 billion.

And just last week the company was dealt another blow when it was not named by Verizon Wireless as one of its suppliers to build the cell phone operator's new 4G wireless network that will use a technology called LTE or Long Term Evolution. Verizon plans to begin building the network this year and will aggressively deploy the speedier network in 2010.

Correction, 12:50 p.m. PST: This story initially mischaracterized a statement made by John Challenger regarding the severity of recent tech-related job cuts. He does not expect them to be as severe as those during the dot-com bust. Also the percentage figures cited within the various sectors reflect the increase in layoffs last year compared with 2007, and not the percentage of jobs cut.

Job cuts in the tech sector increased 74.2 percent in 2008 compared with the previous year, as the industry was battered by an unrelenting wave of layoffs, according to a report released Thursday.

Last year, 186,955 jobs in the telecommunications, computer, and electronics sectors were slashed, according to the report by outplacement consulting firm Challenger, Gray & Christmas.

And the bulk of those cuts, nearly three-quarters, came during the last six months of the year, the report noted. That drove the tech sector to unemployment levels not seen since 2003, according to the report.

"Through the first half of 2008, it looked as though the tech sector might be one of the few areas of the economy to remain resistant to recessionary pressures. However, the economy's continued slide here and overseas saw consumer and corporate demand for technology products and services drop rapidly, and these firms were suddenly under pressure to make significant cost-cutting moves," John Challenger, CEO of Challenger, Gray & Christmas, said in statement.

AT&T, for example, announced 12,000 job cuts last year, while Sun Microsystems unveiled plans to cut 6,000 positions, and Xerox 3,000 jobs.

Within the various sectors in tech, electronics firms saw losses of 73,447 jobs, an increase of 89.7 percent over the previous year; the telecommunications industry saw an increase of 72.5 percent; and cuts in the computer industry were up 61.3 percent.

And in the Silicon Valley, for just the month of December, the unemployment rate rose to 7.7 percent in Santa Clara County and 5.9 percent in San Mateo County. Nationwide, the unemployment rate reached 7.2 percent for the month of December.

And the forecast for 2009 is not looking much better.

"Cuts could reach even higher in 2009, as there is no evidence yet that the economy has hit the bottom of this downward portion of the cycle. We almost certainly will not see a repeat of the 2008 first quarter, in which tech cuts totaled just 17,345," Challenger said in a statement.

He added, however, he does not expect technology-related job cuts to be as severe as the dot-com bust, when 36 percent of all layoffs across a wide swath of industries came from tech.

Sprint Nextel on Monday announced plans to cut approximately 8,000 jobs through the first quarter, as the economic meltdown cuts into the telecommunications carrier's business.

In addition, Sprint plans to suspend its 401k match in 2009, as well as continue with its salary freeze for a second year. The telecommunications carrier's tuition reimbursement program will also be suspended this year.

The workforce reduction is expected to result in a $300 million charge in the first quarter for severance payouts, but also is anticipated to save the company $1.2 billion in annualized labor costs.

Sprint said the job cuts will also include 850 positions lost through its voluntary buyout plan that began late last year.

While the layoffs are expected to affect employees companywide, the degree of the cuts will vary based on geographic location, with the impact expected to be less severe in areas that deal directly with customers, Sprint stated.

The telecommunications carrier is the latest in a growing list of companies to announce layoffs> That group most recently has included software giant Microsoft with 5,000 cuts, Internet search pioneer Yahoo with roughly 1,500 jobs and social media site Digg, which is cutting a small handful of workers, or 10 percent of its 75-person workforce.

In addition to the layoffs, Sprint also announced it will report its fourth-quarter earnings results on Feb. 19.

Motorola announced Wednesday that it plans to cut another 4,000 jobs, or about 6 percent of its workforce, and warned that weaker-than-expected handset sales would lead to a fourth-quarter loss.

Motorola said 3,000 jobs would be eliminated from its handset unit, while another 1,000 jobs would be cut from the rest of the company. The cuts announced Wednesday are in addition to 3,000 job cuts Motorola announced in October as part of a broader restructuring that also halted the launch of many upcoming phones.

"The actions we are taking today in our Mobile Devices business will allow us to further reduce our cost structure and positions us for improved financial performance in 2009," Sanjay Jha, co-chief executive officer of Motorola, said in a statement. "Together with these actions and the announcements made in the fourth quarter, the Mobile Devices business expects to recognize annual cost savings of approximately $1.2 billion in 2009."

"Additionally, we are making good progress in developing important new smart phones for 2009 and are pleased with the positive response from our customers to these new devices," he said.

Motorola expects the latest cost-cutting to result in $700 million in new savings, which when combined with a previously announced plan for $800 million in cuts, brings the total projected savings to $1.5 billion for 2009. The company also warned that its fourth-quarter revenue would come in between $7 billion and $7.2 billion, short of the $7.5 billion analysts had been expecting.

Motorola, which has seen its global handset market share steadily decline, reported sales of 19 million phones, down from 25.4 million in the third quarter and 40.9 million in the fourth quarter of 2007.

Jha, who had been a top executive at Qualcomm, was hired last August to turn around the company's struggling handset business. But even with good leadership Motorola's battle for survival will likely be made more difficult by the current state of the world economy.

Motorola recently postponed the planned spin-off of the handset division into its own company.