Nokia lays off 900 in network divisions, sees promise in handset replacements

Nokia today announced another 900 layoffs in its maintenance and networks division, both of which have been hit hard by the weak telecom market and ensuing carrier reluctance to build out networks.

Nokia deemed the move a realignment to improve the efficiency of the two divisions. The positions will eliminate worldwide, leaving Nokia with a global workforce of 19,000. Despite recent 3G build outs, Nokia’s infrastructure business has suffered considerably in the last year. In June, it further lowered its infrastructure outlook, saying it expected network equipment sales to fall 20% to 25% year-of-year, instead of its pervious guidance of 5% to 10%.

Though Nokia is the world’s largest handset manufacturer, it lags far behind the likes of Lucent, Nortel and other vendors in network equipment sales. Nokia, however, believes its handset business will help offset further losses in the infrastructure business. Though the economy is week, Nokia CEO Jorma Ollila told an investors conference in Boston that pressures to replace aging phones will drive growth in the handset business. 2000 saw one of the biggest spurts in handset sales when more than 405 million units were sold worldwide. Ollila said many of those phones have not been replaced yet, and a natural replacement cycle is due by the end of the year.

Ollila said he expects overall sales growth between 3% and 10% for the year while increasing Nokia’s worldwide market share.