Nokia 2011 Annual Report Download - page 98

the alignment of our markets organization and other supporting functions. For sales, this includes a
move to simplify our model based around four regions, twenty areas and additional local offices that
serve individual countries or territories.
We also announced plans to adjust our manufacturing capacity and renew our manufacturing strategy
to reflect how our global networks of customers, partners and suppliers have evolved, including the
closure of our facility in Cluj, Romania, the review of our manufacturing operations in Komárom,
Hungary, Reynosa, Mexico and Salo, Finland and the transfer of smartphone assembly operations to
Beijing, China and Masan, South Korea.
With respect to combining NAVTEQ and our Devices & Services social location services operations to
form our Location & Commerce business, we announced a plan to capture potential synergies and
opportunities to increase effectiveness through automation. The planned changes in the Location &
Commerce business are estimated to affect approximately 1 300 employees.
Since we outlined our new strategy, we have announced total planned employee reductions of
approximately 11 500 employees, as well as the transfer of approximately 2 300 employees to
Accenture as noted above.
The planned measures support the execution of our strategy and are expected to bring efficiencies and
speed to the organization. In line with our values, we are offering employees affected by the planned
reductions a comprehensive support program. We remain committed to supporting employees and the
local communities through this difficult change.
As of December 31, 2011, we had recognized cumulative net charges in Devices & Services of
EUR 797 million related to restructuring activities in 2011, which included restructuring charges and
associated impairments. While the total extent of the restructuring activities is still to be determined, we
currently anticipate cumulative charges in Devices & Services of around EUR 900 million before the
end of 2012. We also believe total cash outflows related to our Devices & Services restructuring
activities will be below the level of the cumulative charges related to these restructuring activities.
In the past, our cost structure has benefited from the cost of components eroding more rapidly than the
price of our mobile products. Recently, however, component cost erosion has been generally slowing,
a trend that adversely affected our profitability in 2010 and 2011, and may do so in the future.
The currency volatility of the Japanese yen and United States dollar against the euro continued to put
pressure on our costs in 2011. During 2011, we were able to manage the currency volatility driven cost
pressure with an appropriate level of hedging and by managing our sourcing towards more favorable
currencies. Our currency exposure profiles have not changed significantly and continued currency
volatility of the Japanese yen and US dollar against the euro may negatively affect us in the future.
Location & Commerce
Our Location & Commerce business develops a range of location-based products and services for
consumers, as well as platform services and local commerce services for device manufacturers,
application developers, Internet services providers, merchants, and advertisers. The business was
formed during 2011 by the combination of our Devices & Services social location services operations
and our NAVTEQ business. Beginning October 1, 2011, this new business assumed profit-and-loss
responsibility and end-to-end accountability for the full consumer experience. While continuing to serve
NAVTEQ’s existing customers both in terms of provision of content and as a business-to-business
provider of map data, the Location & Commerce business is developing location-based offerings in
support of our strategic goals in feature phones and smartphones, as well as developing a portfolio of
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