Nokia's bad monday morning: class action complaint and plant restructuring, layoffs

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Nokia this morning published two press releases on its website, one talking about the ‘development’ of one of its manufacturing plants and one commenting on a class action lawsuit filed in the United States.

The Finnish mobile juggernaut says it plans to develop the operating mode of its Salo, Finland plant to ensure production is “focused on the high-value smartphone market, especially in Europe”. The plans will result in the introduction of new manufacturing methods, but also entail ‘changes to personnel’ at the facility.

Nokia’s changes to plant operations will affect up to 285 people, primarily employed in production and support functions at Salo, which represents about 13% of the entire workforce at the facility. The company says it will attempt to find new positions at Nokia for as many employees as possible, but clearly the move will result in a significant number of layoffs.

Nokia says it has already initiated consultations with employee reps about its plans, including discussions about voluntary severance packages. Additionally, Nokia plans to stop currently ongoing rotational temporary lay-offs at the Salo plant by the end of June 2010.

Nokia boasts a device manufacturing network with ten sites in 9 countries: Brazil, China, Finland, Hungary, India, Mexico, Romania, South Korea and the UK.

The news of the plant restructuring comes less than two weeks after Nokia reported unexpectedly strong financial results for the fourth quarter of 2009.

In other news, Nokia was hit with a class action complaint in the United States late last week, brought on by The City of Roseville Employees’ Retirement System. The complaint against Nokia, its CEO Olli-Pekka Kallasvuo, then-chief financial officer Rick Simonson and Kai Oistamo (head of Nokia’s phone business) was filed on Feb 5.

The complaint alleges securities fraud in connection with statements made by Nokia between January 24, 2008 and September 5, 2008 regarding the production and sales of certain of its mobile devices, more specifically claiming that the company and top execs hid product delays from investors.

In a brief statement, Nokia says it has reviewed the allegations contained in the complaint and believes that they are without merit, and adds that it will defends itself vigorously.

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