Nokia 'reduces operating expenses': 10,000 jobs to go

The Finnish mobile phone maker also on Thursday announced personnel changes and said it has agreed to sell its luxury phone brand, Vertu.

The measures, aimed at additional cost savings of 1.6 billion euros ($A2 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 centre there.

Nokia 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 2.00 euros for the first time ever on the Helsinki Stock Exchange.

Nordea analyst in Helsinki, Sami Sarkamies, said Nokia's scale of the cost cutting took many by surprise and might not help to strengthen the company.

"When you make such drastic cuts you have to abandon a lot of things," Sarkamies said. "It may be that they just can't anymore afford to come up with innovative, new things."

The loss-making company has been struggling against fierce competition from Apple's iPhone and other makers using Google's popular Android software, including Samsung and HTC. It is also being squeezed in the low-end by Asian manufacturers making cheaper phones, such as China's ZTE.

The company said it would overhaul its management team, with two long-time members of its top leadership - Mary McDowell, the head of the struggling mobile phones unit, and Niklas Savander, head of the markets sector - leaving the company at the end of June. Chief marketing officer and brand manager Jerri DeWard, who joined Nokia in January 2011 will also step down.