Nokia Cutting Thousands Of Jobs, R&D After Alcatel-Lucent Acquisition

Nokia says it's cutting thousands of jobs worldwide as part of a $1 billion cost-saving plan after its recent acquisition of networking rival Alcatel-Lucent.

The telecommunications equipment maker on Wednesday said it is beginning actions to reduce its personnel globally "as part of its synergy and transformation program," according to a release from the Espoo, Finland-based company.

The company could eliminate up to 15,000 positions out of a combined Nokia and Alcatel-Lucent staff of 104,000 -- more than 14 percent of its global workforce.

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One executive of a channel partner of Alcatel-Lucent, which is based in Boulogne-Billancourt, France, said that although the staff reduction on the surface appears negative, the reductions will enable the company to focus more closely on its fast-growing market segments.

"These reductions will enable the combined entity to focus on the fast-growing segments of their business like 4G, 5G and Small Cells, as carriers look to upgrade their infrastructure," said one top executive from a solution provider and Alcatel-Lucent partner who declined to be named, in an email.

"I don't expect that US-based VARs will feel much, if any impact," he said. "From a product perspective, this is a good thing for VARs."

In April, Nokia confirmed plans to acquire Alcatel-Lucent in an all-stock deal valued at around $17 billion. Nokia shareholders approved the acquisition and the two companies began working together in January.

Reductions are expected to come in the areas where Nokia says there are overlaps, such as research and development, as well as regional and sales organizations, according to the release.

Nokia said it will cut about 1,300 jobs in Finland alone and will begin meeting with workers in 30 countries in the upcoming weeks.

The vendor attempting to reduce $1.03 billion in operating costs by 2018, according to the release, while also looking at savings in the areas of manufacturing, real estate, services, procurement and supply chain.

"These actions are designed to ensure that Nokia remains a strong industry leader," said Rajeev Suri, Nokia's president and CEO, in a statement. "We also know that our actions will have real human consequences and, given this, we will proceed in a way that is consistent with our company values and provide transition and other support to the impacted employees."

The channel partner executive said he believes the combined Nokia and Alcatel-Lucent is creating a more formidable foe to competitors such as China-based networking rival Huawei and Ericsson, which formed a strategic partnership last year with Cisco Systems.

However, the executive said, partners need to begin to learn about Nokia's channel strategy. "As a VAR, we'll have to figure out what Nokia's partner engagement model looks like," he said.