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Curtain falls on Nokia’s Finnish home in boom-to-bust demise

Posted on July 09, 2015 12:50:04 AM | BREAKING NEWS

MICROSOFT Corp.’s move to close the site where Nokia assembled its last mobile phone in Finland leaves it with a skeletal crew in the country, spelling the end of an era for what was once the world’s dominant handset manufacturer.

Just 900 jobs will be left in Finland after the U.S. software giant slashes another 2,300 workers from the country, a fraction of the 24,000 that Nokia employed in 2000, when it reigned supreme in the global market for mobile devices.

“In practice, this means the end of the mobile-phone operations of the old Nokia in Finland,” Prime Minister Juha Sipila told a press conference in Helsinki after Microsoft announced the reductions, part of a drive to eliminate as many as 7,800 jobs and write down about $7.6 billion from the handset business that it acquired just over a year ago.

Microsoft will focus its phone engineering and program management in Espoo and Tampere in Finland and discontinue operations in Salo, according to a memo written by Windows and hardware chief Terry Myerson and obtained by Bloomberg.

Nokia’s rapid decline from a powerhouse of innovation and design to a failing business scrambling to stem a loss of market share has sent shock waves through the Nordic country’s economy. At its peak in 2000, Nokia generated about 4 percent of Finland’s gross domestic product, and its reversal of fortunes hit the country hard as thousands of jobs were lost.

Nokia closed its manufacturing plant in Salo and facilities in Ulm, Germany, and Burnaby, British Columbia, in 2012 as part of a move to cut some 10,000 positions. Still it continued to watch its profitability fall as its smartphones failed to sell. Microsoft said Wednesday that demand for the handsets had not met original expectations.

Decline, Fall

In its heyday, Nokia’s market value reached $320 billion, and its earnings reports were closely watched by investors. When Apple Inc. revolutionized the industry with its iPhone, Nokia failed to respond and stuck instead with its outdated Symbian software. The company switched to a Windows operating system under Stephen Elop, who had come from Microsoft, before it was outright purchased by the Redmond, Washington-based software company.

“Looking at Windows Phone and its market share globally, there’s no other conclusion to be made -- it’s over,” said Jorma Malinen, head of trade union Pro, which represents many of Microsoft’s R&D workers in Finland.

Still, Finns can take solace in the fact that the Nokia name lives on. After the mobile-phone subsidiary was sold, the remaining business retained the name and entered rehabilitation with a focus on telecommunications equipment. As a sign of its regained prowess, Nokia agreed in April to buy French networking-equipment rival Alcatel-Lucent SA in a 15.6 billion- euro ($17 billion) deal. Nokia employed about 60,000 people at the end of last year.

“We must remember that a company named Nokia is doing well and developing at the moment,” Sipila said. - Bloomberg