Finland's Nokia, one of the world's biggest mobile phone makers, saw its share price plummet Thursday after a surprise announcement that it would cut 10,000 more jobs amid deep additional cost-cutting measures.
"These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," company chief executive Stephen Elop said in a statement.
Following the news, Nokia, which only recently lost the world number one ranking it had held for 14 years, saw its share price plunge more than 16 percent in late afternoon trading on the Helsinki stock exchange, which was down 1.25 percent overall.
The company, undergoing a major restructuring for more than a year, said it would implement an additional 1.6 billion euros ($2.0 billion) in cost reductions by the end of next year, especially affecting its beleaguered Devices & Services unit.
As part of the cuts, Nokia said it would close facilities in Ulm, Germany and Burnaby, Canada, and its manufacturing plant in Salo, Finland, although its Salo research and development operations would continue.
"As a result of the planned changes announced today, Nokia plans to reduce up to 10,000 positions globally by the end of 2013," the company said, adding that it had begun discussions with unions and other employee representatives.
"It's been a very hard day," Elop acknowledged in a conference call with analysts, but insisted the downsizing was needed to streamline operations and focus Nokia's business mainly on its new Lumia smartphone series.
Finnish Prime Minister Jyrki Katainen lamented the massive cuts at the country's biggest company.
"Nokia's layoff news is a big blow to people who will lose their jobs, but also to Finland's economy," he told the STT news agency.
Analysts were also caught off guard by the announcement.
"These cuts were bigger than anyone expected. We knew that something would happen but this was well beyond our expectations," Nordea Bank analyst Sami Sarkamies told AFP, speculating that the deeper-than-expected spending cuts and falling stock price could make Nokia a prime takeover target.
"It is possible that in the current situation a bigger company would buy Nokia," he said.
Andalys Oy analyst Ari Hakkarainen agreed that Nokia looked ripe for picking, but said it remained unclear if any of its main competitors would want to buy the Finnish company and add its strong brand name to their portfolio.
"I believe Nokia will survive but I don't know how big it will be or who the owners will be," he told AFP.
Nokia also announced a massive management reshuffle, especially in its sales and marketing divisions.
"We have truly great products but we're not always getting the traction we need," Elop explained, saying the main challenge facing the company was "breaking through the strength that Apple and Android have in a sales environment."
"We have a lot of work to do in sales and marketing," he said.
The move came as Nokia continues to suffer major market share losses in the all-important smartphone market.
Nokia has since early 2011 been restructuring and phasing out its Symbian smartphones in favour of a partnership with Microsoft.
That alliance has produced a first line of Lumia smartphones, which Nokia is counting on to help it survive in a rapidly changing landscape marked by stiff competition from RiM's Blackberry, Apple's iPhone and handsets running Google's Android platform.
"We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services," Elop said.
Nokia acknowledged that competition in the second quarter was hitting its smartphone business harder than expected and warned the operating loss in its main mobile devices unit would be bigger than previously anticipated.
The company, which announced disastrous results in the first quarter and recently saw its credit rating downgraded to junk status by Fitch and Standard and Poor's, said it would "closely assess the future of certain non-core assets."
It also confirmed reports that it would sell its luxury mobile phone business Vertu, whose haute-couture jewel encrusted mobile phones cost from 4,000 euros and up, to private equity firm EQT VI.
As part of its strategy to focus more heavily on its Lumia line and new technologies, Nokia also announced "the planned acquisition of assets from Sweden-based Scalado, which currently has imaging technology on more than one billion devices."