Nokia plans to invest in products and experiences that make Lumia smartphones stand out and available to more consumers; invest in location-based services and extend its location-based platform to new industries; and improve the competitiveness and profitability of its feature phone business.
To execute this strategy, Nokia is also making changes to its management team. The company has appointed Juha Putkiranta as executive vice president of operations; Timo Toikkanen as executive vice president of Mobile Phones, Chris Weber as executive vice president of sales and marketing; Tuula Rytila as senior vice president and chief marketing officer; and Susan Sheehan as senior vice president of communications. Putkiranta, Toikkanen and Weber also will join the Nokia Team effective July 1, 2012.
To support this period of transition, Nokia intends to improve its operating model by significantly reducing its Device & Services operating expenses, reducing its headcount and reducing its factory footprint.
"We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia," said Stephen Elop, Nokia president and CEO. "We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions."
In Smart Devices, Nokia plans to extend its strategy by broadening the price range of Lumia and continuing to differentiate with the Windows Phone platform, new materials, new technologies and location-based services. In line with this strategy, Nokia today announced the planned acquisition of assets from Sweden-based Scalado, which currently has imaging technology on more than 1 billion devices. This acquisition is aimed at strengthening Nokia's imaging assets. The transaction, which is subject to customary closing conditions, is expected to close during the third quarter of 2012. Nokia did not disclose the terms of the transaction.
Nokia's location-based platform is expected to be another principal area of investment as Nokia plans to differentiate its portfolio of Lumia smartphones with location-based services including navigation and visual search applications such as the recently announced Nokia City Lens. Additionally, the company plans to extend its mapping technology to multiple industries to strengthen the platform and generate new revenue.
In Mobile Phones, Nokia intends to improve its competitiveness and profitability. Nokia aims to further develop its Series 40 and Series 30 devices, and invest in key feature phone technologies like the Nokia Browser.
Balancing its investment priorities, Nokia plans to rescale the company by making additional reductions in Devices & Services. Nokia plans reductions within certain research and development projects, resulting in the planned closure of its facilities in Ulm, Germany and Burnaby, Canada; consolidate certain manufacturing operations, resulting in the planned closure of its manufacturing facility in Salo, Finland; focus on marketing and sales activities; and streamline its IT, corporate and support functions.
As a result of the planned changes, Nokia plans to reduce up to 10,000 positions globally by the end of 2013.
Nokia now targets to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately EUR 3.0 billion by the end of 2013.
As part of these planned changes, Nokia will assess the future of certain non-core assets. In line with this, Nokia today announced plans to divest Vertu, its luxury mobile phones business to EQT VI, a European private equity firm.
Vertu is headquartered in Church Crookham, UK and employs approximately 1,000 people worldwide.
The transaction is expected to close during the second half of 2012, subject to customary regulatory approvals and closing conditions. Nokia said it would retain a 10% minority shareholding in Vertu.