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Local Fallout Possible in Nokia Shakeup

NOKIA CORP.

CEO: Stephen Elop.

Revenue: $50 billion in 2011; $57 billion in 2010.

Net income: Net loss of $1.9 billion in 2011; net profit $1.8 billion in 2010.

No. of local employees: Doesn’t disclose.

Headquarters: Espoo, Finland, outside Helsinki.

Year founded: 1865.

Stock symbol and exchange: NOK, New York Stock Exchange.

Company description: Maker of telecommunications infrastructure and hardware and software; makes a variety of cellphones.

Nokia Corp., the Finnish cellphone maker, said it plans to cut about 10,000 jobs globally over the next year, yet, declined to say whether the reductions would affect its local office in Rancho Bernardo.

The company said it plans to close two research and design offices in Germany and Canada, along with a manufacturing plant in Finland.

In conjunction with the job cuts, Nokia conducted a shakeup of several top managers, and said its losses for the second quarter would be greater than it anticipated two months ago.

Nokia spokesman Keith Nowak said the three sites slated to close were planned, and that “we have not made any announcements regarding other sites that may or may not be affected.”

Nokia has had a presence in San Diego since 1991 and once had more than 1,100 employees working here. In 2010, it moved from a Scripps Ranch office to a newly- constructed, 197,000-square-foot building on West Bernardo Road.

Rory Moore, chief executive at CommNexus, a nonprofit trade group for the telecom industry here, said his organization recently helped Nokia with a job fair to fill some 50 slots at the local office, mainly engineers.

“I would be shocked if they did any meaningful layoffs here,” Moore said.

Nowak declined to provide the number of employees working in Rancho Bernardo, or acknowledge that the local office expanded this year. “Unfortunately I cannot get into the head count numbers at our San Diego site, but I can say it is a sizable facility for Nokia in the U.S.,” he said by email.

Local Office Far Off Its Peak

The work at the local office is mainly research and design for Nokia’s smartphones, Nowak said

Moore estimated the head count at the Rancho Bernardo office between 350 and 375, far off its peak reached about six years earlier.

Nokia is dealing with higher costs associated with maintaining its own manufacturing operations unlike major competitors like Apple Inc. and Google Inc. that contract with others to make their phones, Moore said.

Shares of Nokia fell 16 percent June 15 after the company revealed the news of its cuts, but recovered to close up 13 cents to $2.48. At June 19, shares rose to $2.54. In November, the stock that trades under ticker NOK on the New York Stock Exchange was above $7; in early 2010, it was above $15. Based on the current market price, its market capitalization is about $9.4 billion, down from the heady days of 2008 when its market cap was about $150 billion.

Nokia was once the world’s No.1 maker of cellphones, but IDC, a market research firm, said the company’s market share fell in the first quarter to second place and 20.5 percent, behind the new market leader, Samsung Electronics, which captured 23.5 percent of the total cellphone market. For smartphones alone, IDC reported Samsung’s market share was 29 percent, ahead of No. 2 Apple with 24 percent, and No. 3 Nokia at 8 percent for the same time.

Nokia’s fortunes may have been lifted a bit last week when Microsoft Corp. released is Surface tablet, a direct competitor to Apple’s iPad. Last year, as sales of Apple and Samsung smartphones soared, Microsoft agreed to partner with Nokia to put its Windows operating system on Nokia’s smartphones called Lumia, and dumped its own operating system called Symbian.

This isn’t the first time that Nokia slashed its local workforce. In 2006, the company cut its San Diego staff in half, from about 1,100 to 550 after it decided to exit making cellphones running on Qualcomm’s proprietary CDMA wireless technology. At the time, Nokia said the royalty fees associated with CDMA were too high. Nokia continues making phones that run on an alternate wireless technology called GSM for global systems for mobile communications.

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