To cope with a tumbling market that is exhausting the company's earnings, Finnish cellphone maker Nokia declared its intentions to cut 10,000 jobs or 19 percent of its workforce by the end of 2013.
The company which has been undergoing a major restructuring process said it would implement an additional 1.6 billion euros ($ 2.0 billion) in cost reductions by the close of next year.
Nokia continues to languish as it tries to reinvent itself. The company has lost major market share to cellphone rivals Apple, Samsung Electronics and HTC of Taiwan.
It is also facing competition from Asian manufacturers making cheaper phones, such as China's ZTE.
“The job cuts and profit warning underline the seriousness of the challenges Nokia is facing, particularly in light of the eye-watering competition from Apple and Samsung,” said Ben Wood, head of research at CCS Insight.
Deep staff reductions
The overhaul would result in the shuttering of Nokia’s facilities in Ulm, Germany, Burnaby, Canada. The handset maker's manufacturing plant in Salo, Finland will be closed and about 850 employees will be fired.
However, operations at the research and development center in Salo would continue.
Stephen Elop, the Nokia chief executive and a former Microsoft executive stated, "These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia’s long-term competitive strength."
"We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities."
Overhaul of management team
The restructuring strategy will also mark the revamping of the management team. Three senior executives, including Mary McDowell, the head of the mobile phones unit and Niklas Savander, head of the markets sector will step down.
Also, chief marketing officer and brand manager Jerri DeWard, will resign from the company by the end of June.
In terms of replacements, Juha Putkiranta will take over as executive vice president of operations, Timo Toikkanen has been appointed executive vice president of Mobile Phones while Chris Weber was named executive vice president of sales and marketing.
Nokia appointed Tuula Rytila as senior vice president of marketing and chief marketing officer and Susan Sheehan, a former Microsoft executive as senior vice president of communications.
The new team will be in place from July 1, 2012.