Nokia Corp. will lay off 10,000 jobs globally and close plants by the end of 2013, the company said on Thursday, in a further drive to save costs and streamline operations.
Nokia said it will shut some research and development projects, including in Ulm, Germany, and Burnaby, Canada, and close its core manufacturing plant in Finland - in Salo - where it will only maintain research and development operations.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Nokia CEO Stephen Elop said. "We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia."
Nokia also gave an updated outlook, saying that "competitive industry dynamics" in the second quarter would hit its smartphone sector to a "somewhat greater extent than previously expected" and that no improvement was expected in the third quarter.
The company's share price plunged more than 7 per cent to €2.05 ($2.63) in morning trading in Helsinki.
Although the Finnish cellphone maker said it plans "to significantly reduce its operating expenses," it will continue to focus on smartphones as well as cheaper feature phones and intends to expand location-based services.
Nokia also announced that private equity group EQT VI had agreed to acquire Vertu, its global luxury phone brand, but that the Finnish company would keep a 10 percent minority shareholding. No financial terms were announced.
Nokia said that two members of its top leadership team will leave - Mary McDowell, the head of the struggling mobile phones unit and Niklas Savander, head of the markets sector.
The loss-making company has been struggling against fierce competition from Apple Inc.'s iPhone and other makers using Google Inc.'s popular Android software, including Samsung Electronics Co. and HTC of Taiwan. It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.