Nokia is not immune to the financial crunch the world is facing and to “ increase cost-efficiency and adapt operations to market situation” Nokia is planning some drastic measures

We all know that Cost –Efficiency leads  to downsizing which is what Nokia is doing at it’s plants by  closing  its mobile devices R&D site in Jyväskylä, which focusies on mobile market development and close it down by end 2009 leaving 320 people unemployed and moving the R&D operations to it’s other sites in Finland at  Tampere, Oulu, Salo and the Helsinki metropolitan area thus making cost centers and increase efficiency in R&D  and all Nokia has to say is

“Our employees in Jyväskylä are highly competent and have contributed to the creation of numerous hit products. The planned closure of the Jyväskylä site is an unfortunate, yet unavoidable measure. We must adjust our resources to reflect reduced market demand in order to maintain our competitiveness also in the future,” says Peter Røpke, Senior Vice President, Devices R&D, Nokia.

Yeah Right !!!

Beside Nokia is also planning ‘temporary’ layoffs a Salo production plant while  aligning production with market demand while continuing operations without interruption. The layoff are rotational i.e at any given time 20 – 30% of it’s 2500 employees will be temporarily laid off , then rehired and other batch is laid off covering everyone at the site.

With these plans, we aim to scale down Salo production to reflect reduced market demand, while operations in the factory continue uninterrupted,” says Juha Putkiranta, Senior Vice President, Demand Supply Network Management, Nokia. “This is one of the measures we are taking to adjust our global demand supply network to the current situation.”

Nokia is not the only one taking drastic measures in phone industry , Sony Ericsson , Motorola both have drastically reduced their work forces , but what about Nokia India plant , it’s the largest plant Nokia has in terms of man power but again in India employee costs are not as high as elsewhere so Nokia can afford to keep their largest workforce their

Watching the Financial Turmoils

Farhan

Nokia is in process to sell 1.75 billion Euro worth of bonds , 1.25 billion Euros having 5 year maturity spread on 250 ( 2.5 % ) basis points  and rest 500 million Euro having 10 year maturity spread on 315 ( 3.15 % )  basis points ( a basis point is one hundredth of a percentage ) Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. organized the issue

A low quarterly profit and gloomy sales forecast is putting the mobile giant in a financial crunch and even forced it to lower it’s dividend for the first time in 7 years .

“Nokia is in a weak sector but the deal is cheap enough, it’s inaugural and it’s a household name,” Suki Man – credit strategist at Societe Generale SA in London ( source Bloomberg)

No Nokia executive has commented on the issue as yer.

Nokia’s current debt stands $2 billion seven-year revolving credit line arranged in 2005

Current Closing Nokia share prices are

In Helsinki ( HEL ) Euro 9.9 with high reaching 10.01 and lows of 9.63

In New York closing at $ 12.99 from high reaching 13.24 and lows at 12.85

Financial Ranking Companies Moody’s Investor Service is rating Nokia as A1 ( 5th highest investment category) while S & P  has Nokia at A.

So are you planning to buy a part of Nokia or selling your share . I for one had never been in the market .

Farhan