The two largest European makers of telecommunications equipment, Nokia and Ericsson, announced plans on Thursday to continue or accelerate cost-cutting efforts in the face of rising competition, internal reorganizations and weak demand in North America.
Nokia, the largest seller of mobile phones by volume, said it planned to cut more than the 1 billion euros ($1.43 billion) it had previously planned to trim from its operating expenses by 2013. The company, based in Espoo, Finland, did not specify a new target.
It announced the new plan as it reported a loss of 368 million euros in the second quarter.
Ericsson, the largest maker of telecom networking equipment, said it took a restructuring charge of 1.3 billion Swedish kronor ($202 million) in the quarter, more than some investors had been expecting, to pay for layoffs in Sweden.
The separate announcements created heavy trading in shares of both companies in Europe.
Ericsson?s shares fell nearly 10%, even though the company, based in Stockholm, reported a 59% increase in profit and a 14% rise in sales.
Nokia?s shares rose 2.5% as investors welcomed the handset maker?s intention to increase its austerity measures. Nokia said its sales fell 7% in the second quarter, to 9.275 billion euros from 10 billion euros a year earlier.
Pete Cunningham, an analyst at Canalys in Reading, England, said Nokia?s sales decline stemmed from its difficulty selling smartphones that use its Symbian operating system in China. Nokia said in February that it planned to progressively replace Symbian with Microsoft?s Windows phone software starting later this year.
?This is obviously not good news from Nokia,? Cunningham said. ?I think the appetite for Symbian devices has fallen away very quickly since Nokia made the announcement about moving to Microsoft in February. This shows they definitely need those Windows phones as soon as possible.?
Stephen Elop, the Nokia chief executive hired from Microsoft last year, said Nokia had replaced key sales executives, reduced inventories in China, revamped its handset-pricing strategy and refocused its retail marketing programs to compensate for the downturn.
?The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011,? Elop said in a statement. ?However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business.?