HELSINKI (Tarmo Virki, European Technology Correspondent) - Nokia will axe 7,000 jobs and outsource its legacy Symbian software to slash 1 billion euros ($1.46 billion) of costs as it struggles to compete in the fierce smartphone market.
Nokia, the world's largest phone maker by volume, on Wednesday detailed an overhaul of its phone business following its decision to start using Microsoft software instead of its own Symbian platform.
The move includes laying off 4,000 staff and transferring another 3,000 to services firm Accenture - a total 12 percent of its phone unit workforce.
Accenture will take over Nokia's legacy Symbian software activities and support future smartphones, including those running on Microsoft's Windows platform.
Shares in Tieto, a key local supplier of services to Nokia, dropped more than 3 percent.
Investors welcomed the Accenture deal as a quicker and cheaper way to exit its Symbian operations than full-scale layoffs requiring big severance packages, sending Nokia shares 3 percent higher on the Helsinki stock exchange.
"This is about keeping focus within Nokia on Windows Phone. It helps to get rid of any doubts on where this company is going," said Gartner analyst Carolina Milanesi.
"For Accenture this opens up opportunities in mobile application development," Milanesi said.
The deal enables Nokia to cut annual business research and development costs by 1 billion euros, or 18 percent, by 2013 from 5.65 billion in 2010.
"Restructuring had been widely expected but Nokia will be hoping that the transfer of 3,000 of jobs to Accenture will help cushion the blow as it ramps down its Symbian investments," said Ben Wood, head of research at CCS Insight.
Nokia's market share in smartphones has fallen sharply over the past few years as it loses out to Apple and other manufacturers of high-end handsets.
"The competitive environment has changed rapidly," Nokia's Chief Executive Stephen Elop told a news conference in Helsinki, while outlining which parts of operations will be hit the most.
Nokia said most of the 4,000 layoffs will take place in Finland, Denmark and Britain, with all workers staying on the payroll through 2011.
Nokia hired Elop from Microsoft last year to replace Olli-Pekka Kallasvuo, in a bid to compete more effectively in the smartphone market. He is the first non-Finn to run the company, which evolved from a rubber boots-to-TVs conglomerate into a global mobile phone maker in the 1990s.
In its native Finland, Nokia will cut 1,400 jobs.
"This went slightly better than expected, because Nokia transfers Symbian development. These 1,400 people to be laid off are mainly MeeGo coders and they should have quite good chances to find new jobs," said Pertti Porokari, chairman of the Union of Professional Engineers in Finland.
Nokia's telecom gear arm Nokia Siemens Networks cut around 9,000 jobs after it started operations in 2007.
Nokia said it would wind down its large operations in Copenhagen, cutting 950 jobs there, and close its second headquarters in White Plains, New York.
The move crushed Finnish media speculations of Nokia planning to move its headquarters to the United States.
"Finland absolutely remains in the heart of Nokia's future," Elop said.
Job cuts at Finland's flagship company is a blow to confidence in the country, already struggling with unemployment of around 8 percent.
Worries about jobs and possible cuts to social welfare fueled the popularity of the populist and eurosceptic True Finns party in the country's general election earlier this month.
(Additional reporting by Terhi Kinnunen and Ritsuko Ando; Editing by Dan Lalor and Erica Billingham)
Copyright 2011 Thomson Reuters. Click for Restrictions.
Our 2024 Coverage Needs You
It's Another Trump-Biden Showdown — And We Need Your Help
The Future Of Democracy Is At Stake
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
The 2024 election is heating up, and women's rights, health care, voting rights, and the very future of democracy are all at stake. Donald Trump will face Joe Biden in the most consequential vote of our time. And HuffPost will be there, covering every twist and turn. America's future hangs in the balance. Would you consider contributing to support our journalism and keep it free for all during this critical season?
HuffPost believes news should be accessible to everyone, regardless of their ability to pay for it. We rely on readers like you to help fund our work. Any contribution you can make — even as little as $2 — goes directly toward supporting the impactful journalism that we will continue to produce this year. Thank you for being part of our story.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
It's official: Donald Trump will face Joe Biden this fall in the presidential election. As we face the most consequential presidential election of our time, HuffPost is committed to bringing you up-to-date, accurate news about the 2024 race. While other outlets have retreated behind paywalls, you can trust our news will stay free.
But we can't do it without your help. Reader funding is one of the key ways we support our newsroom. Would you consider making a donation to help fund our news during this critical time? Your contributions are vital to supporting a free press.
Contribute as little as $2 to keep our journalism free and accessible to all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you'll consider contributing to HuffPost once more.
Support HuffPostAlready contributed? Log in to hide these messages.