Recruiting in China

Nokia has announced more job cuts, and they’re unlikely to be the last. On March 17, the company said it is eliminating 1,700 jobs, including about 700 in Finland. The announcement comes a month after Nokia said it was closing a research and development center in Finland, while imposing temporary layoffs at a Finnish handset factory.

But more cuts will be needed for Nokia to meet its goal of saving $900 million, says analyst Jari Honko at eQ Bank in Helsinki. He estimates the measures disclosed so far will save about $390 million. So Nokia isn’t even halfway there.

Compared to what’s going on in some other industries, the scale of the latest job cuts is modest—though that is certainly no consolation to the Nokia employees affected. The 1,700 jobs, including about 700 in Finland, represent only about 1% of Nokia’s total workforce. It’s also worth remembering that Nokia increased its headcount by 16,000 people in 2008, so the most recent round of cuts represents less than two months of recent hiring.

Most Nokia watchers still believe that the company’s scale and history of innovation will enable it to emerge from the downturn stronger than competitors such as Motorola. But 2009 will be a perilous year for Nokia. The company lost market share in smartphones to Apple and Research In Motion in the fourth quarter (though Nokia may have gained some share back after rolling out its touch-screen 5800 XpressMusic handset in recent months). Growth in emerging markets has stalled. Nokia Siemens Networks, the company’s telco equipment unit, faces a strong challenge from China’s Huawei.

Nokia investors can only hope that the company will show the same pluck and creativity that has rescued it from big setbacks in the past.