Once the world’s leading mobile phone producer, Nokia intends to slash 10,000 jobs because it is losing market share to rivals Samsung and Apple. On Thursday Nokia reported that its second quarter loss would be much more than expected because of tough competition which is expected to increase even further.
The company is struggling to face competition from Google, Samsung and Apple. Additionally its market share of more basic phones is also decreasing.
Stephen Elop, Chief Executive is pinning hopes on Lumina smartphones that utilize untested Microsoft Corp software. However Lumina’s sales have been disappointing so far which has frustrated investors who have lost over 70% since February 2011. Analysts say that profit warning and job cuts emphasize the gravity of the problems Nokia is facing, mainly in light of the strong competition from Samsung and Apple. They say that cash outflows for restructuring would be roughly 650 million Euros during the remaining quarters of 2012 and about 600 million in 2013. Due to increasing cost of debt, the company might be at the brink of default if drastic measures are not taken well in time. This is certainly not a good position for a company as big as Nokia.
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