Shares of the company dropped 18 per cent on Thursday to close at Euro 1.83 ($2.30).
The Finnish cellphone maker also announced a management rejig on Thursday and said it has agreed to sell its luxury phone brand, Vertu.
CEO Stephen Elop said the planned cuts were "a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength."
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"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," he added.
The measures, aimed at additional cost savings of Euro 1.6 billion ($2 billion) by the end of next year, will shut down research and development facilities in Ulm (Germany) and Burnaby (British Columbia).
Nokia said it will also close its main Finnish manufacturing plant in Salo, with 850 layoffs, but will keep its research and development center there.
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Nokia Corp updated its outlook, saying that heavy competition would continue to hit its smartphone sector in the second quarter, but to a "somewhat greater extent than previously expected" and that the downturn would continue in the third quarter.
Markets were disappointed, plunging Nokia shares to below Euro 2.00 for the first time ever on the Helsinki Stock Exchange.
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.
Markets had been expecting Nokia to signal some improvement in its earnings expectations for this year after it joined forces with Microsoft Corp in 2011, launching several Windows Phone 7 models, including its sleek Lumia range.
But the new handsets have received mixed reviews and the company and made no mention of the much-anticipated Windows 8 version.
Its revised outlook bodes ill for the former bellwether of the wireless industry that held the No. 1 cellphone maker spot for 14 years.
In April, Nokia announced one of its worst quarterly results ever, blaming tough competition for a Euro 929 million net loss in the first quarter as sales plunged, especially in the smartphone market.
Elop said that more than a third of the global job cuts - 3,700 - will be in Finland, sending shivers through the small Nordic nation that has been intensely proud of Nokia's past success.
But he pledged to keep the company's corporate headquarters in Espoo, near the capital, Helsinki, and said much of the R&D will continue here.
"Nokia's core is in Finland. We firmly believe that at the heart of any company, the soul of a company, is something that includes its national identity," Elop said. "We continue to have significant operations in Finland. In fact, two-thirds of our Lumia team is in Finland."
The Espoo-based company said that although it plans "significant" cuts in operating expenses, it will continue to focus on smartphones as well as cheaper feature phones and intends to expand location-based services.
Last year, Nokia announced more than 10,000 layoffs, aimed at cutting operating expenses by Euro 1 billion ($1.31 billion) by 2013. Thursday's savings aims come on top of those.
source: http://businesstoday.intoday.in/story/shares-slump-18-per-cent-as-nokia-to-cut-10000-more-jobs/1/185497.html
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