text: Nokia Oyj (NOK1V) reduced its earnings forecast for the second time this year and said it will cut as many as 10,000 more jobs and shut production and research sites in Chief Executive Officer Stephen Elop’s biggest overhaul. 
   
   The stock fell 18 percent to the lowest level since 1996, pushing Nokia’s market value below $10 billion. As part of the changes, sites in Finland, Germany and Canada will be closed and executives Niklas Savander, Mary McDowell and Jerri DeVard will leave, Espoo, Finland-based Nokia said today. 
   
   Elop, who took over as CEO in 2010, is reorganizing Nokia after market-share gains by Apple Inc.’s iPhone and Samsung Electronics Co. devices led to a slump in sales and four straight quarterly losses. The company risks going out of business in as little as two years unless it reduces expenses, said Alexander Peterc, an Exane BNP Paribas analyst in London. 
   
   “They are trying to survive,” said Peterc, who has an underperform rating on the stock. “They can’t continue like this.” 
   
   Nokia said the second-quarter adjusted operating margin at the devices unit will be worse than a loss equivalent to 3 percent of revenue in the first quarter. Nokia had projected margins to be “similar to or below” the first-quarter level. 
   
   Nokia fell 39.6 cents to 1.83 euros at the close of trading in Helsinki, bringing the stock’s decline in the past 12 months to 58 percent. The company has a market value of 6.8 billion euros ($8.6 billion), down from a peak of more than 300 billion euros in 2000. 
   
   Cash Burn 
   
   The job cuts, 3,700 of which will take place in Finland, amount to almost a fifth of the total excluding a joint venture with Siemens AG. (SIE) Elop had already announced more than 10,000 job cuts across the company. He said in April that Nokia would speed up a cost-cut program and take further actions if needed. 
   
   “This is harder than we thought and we’re having to make deeper changes,” Elop said today on a conference call. He said Nokia has enough net cash to go through the transition and “the scope of today’s changes is designed to ensure this remains true.” 
   
   A substantial drop in sales could be enough to burn through most of the company’s cash and “bring into question Nokia’s very survival,” Societe Generale said last month. Nokia, which had its ratings cut to junk by Standard & Poor’s and Fitch Ratings in April, said it had net cash of 4.9 billion euros as of March 31. 
   
   Takeover Target? 
   
   The cost of insuring Nokia bonds using credit-default swaps rose to its highest since May 25, when it reached a record. It jumped 87 basis points, or 11 percent, to 853 basis points, according to Bloomberg prices. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. 
   
   Nokia has lost more than 70 billion euros in market value since Apple introduced the iPhone in 2007, taking the lead in smartphone innovation. While Nokia’s falling value brings it closer to becoming a takeover target, the company needs to stabilize its business to attract suitors, said Lars Soederfjell, an analyst with Bank of Aaland in Stockholm. 
   
   “Would you buy into this, with these type of fundamentals?” he said. “There’s too much uncertainty.” 
   
   Lumia Demand 
   
   To challenge Apple and handset makers using Google Inc.’s Android software, Elop adopted Microsoft Corp. (MSFT)’s Windows Phone, abandoning Nokia’s homegrown Symbian operating system. Nokia shipped more than 2 million Lumia smartphones running Windows Phone last quarter, while Apple sold 35.1 million iPhones. 
   
   Elop today reiterated Nokia’s commitment to Windows Phone, saying however that progress with the products has been “slower than we would like.” 
   
   Nokia’s total handset shipments declined 24 percent in the first quarter, allowing Samsung to overtake the company as the world’s biggest mobile-phone maker. Nokia’s operating margin for mobile phones plunged to 3.7 percent last year from more than 20 percent before Apple introduced the iPhone in 2007. 
   
   “We don’t have Nokia returning to profitability in devices in the foreseeable future, not this year and not next,” Peterc said. 
   
   The job cuts are are aimed at accelerating Nokia’s cost- reduction efforts. The company now targets additional savings of about 1.6 billion euros, aiming to bring annual expenses at its devices business to about 3 billion euros by the end of 2013. That’s down from 5.35 billion euros in 2010. 
   
   Killing Projects 
   
   The company will close a manufacturing plant in Salo, Finland, and facilities in Ulm, Germany, and Burnaby, British Columbia. The cuts and closures will result in expenses of about 1 billion euros, Nokia said. 
   
   The biggest share of cuts will come in research and development, where Nokia is killing whole projects to preserve others that are more important, Chief Financial Officer Timo Ihamuotila said on a call. Sales is the second-biggest area affected and general overhead is third, he said. 
   
   Elop promoted Timo Toikkanen, Nokia’s head of business development, to take over from McDowell as executive vice president for low-end phones. Tuula Rytilae will become chief marketing officer, replacing DeVard. Savander’s title was executive vice president of markets. 
   
   Chris Weber, who introduced the Lumia line in North America as the head of U.S. operations, will become executive vice president of sales and marketing. Juha Putkiranta was named to a new job of executive vice president of operations. 
   
   The company also agreed to sell its Vertu luxury-phone unit to Swedish private-equity firm EQT Partners AB, without disclosing terms. The companies were discussing a deal at about 200 million euros, people with knowledge of the matter said earlier this week. 
   
   Nokia had 53,553 workers at the end of March, excluding the network-gear joint venture with Siemens. Including Nokia Siemens Networks, the company employed 122,148 people, down 6.7 percent from a year earlier. 
   
   Nokia Siemens, which also is struggling to return to profit, is cutting 17,000 jobs worldwide to save 1 billion euros in annual operating expenses and production costs by 2013. 
   
   To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net 
   
   To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net ||||| 1 of 5. Jekaterina Kapanen (R) leaves the Nokia mobile phone plant, after Nokia's CEO Stephen Elop's statement that was relayed by video link to employees in Nokia locations around Finland, in Salo, south-western Finland, June 14, 2012. Loss-making Finnish cellphone maker Nokia plans to cut another 10,000 jobs globally in its biggest revamp in recent history, while it warned the second-quarter loss from its cellphone business would be larger than expected. The cuts, which include the closure of Nokia's only plant in Finland, bring total planned job cuts at the group since Elop took over as chief executive in 2010 to more than 40,000. 
   
   PARIS (Reuters) - Nokia plans to cut 10,000 more jobs, bringing the total to one in three staff, as it loses market share to cellphone rivals Apple and Samsung and burns through cash, raising new fears over its future. 
   
   In a second profit warning in nine weeks, Nokia said on Thursday that its phone business would post a deeper-than-expected loss in the second quarter due to tougher competition, which it expected to continue. 
   
   Once the world's dominant mobile phone provider, Nokia was wrongfooted by the rise of smartphones and is struggling to keep up with Apple, Samsung and Google. It is also losing market share in cheaper, more basic phones. 
   
   Chief Executive Stephen Elop is placing hopes of a turnaround on a new range of smartphones called Lumia, which use largely untried Microsoft Corp software. But Lumia sales have so far been slow, exasperating investors who have seen its stock crash more than 70 percent since it announced the software switch in February 2011. 
   
   "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. 
   
   Nokia, whose cash position is increasingly scrutinized by investors, also said restructuring-related cash outflows would be around 650 million euros in the remaining three quarters of 2012 and around 600 million in 2013. 
   
   With the cost of Nokia's debt rising, the most bearish of analysts in a Reuters poll last month said the company could even be at risk of default if it fails to slow its cash burn. 
   
   Over the past five quarters, the onetime darling of mobile telcoms has eroded its cash pile by 2.1 billion euros - a rate that would wipe out its entire 4.9 billion reserves in a couple of years. 
   
   Analysts at JP Morgan said on Thursday they expect operating losses, combined with restructuring outflows, to leave Nokia with 1.63 billion euros cash at the end of next year. 
   
   "This is not a comfort zone for a company as large as Nokia," the analysts said. 
   
   Nokia's five-year credit default swaps (CDS) were at a new all-time high of 933 basis points on Thursday according to Markit. This means it costs $933,000 annually to buy $10 million of protection against a Nokia default using a five-year CDS contract and implies a default probability of 55 percent. 
   
   Bernstein analyst Pierre Ferragu said he expects the company to have minimal net cash position at the end of its restructuring. 
   
   "We therefore see continued potential downside to the recent stock price and maintain our underperform rating," Ferragu said. 
   
   Shares in Nokia were down 16 percent to 1.87 euros, below the psychologically important 2 euros mark, not seen since 1996. 
   
   Analysts have said that even with the dramatic fall in the share price, the worsening outlook made it hard to judge how much lower the shares could go. 
   
   "I won't comment on the stock price anymore, since it's been seen over and over, that there is no definitive bottom," said Evli analyst Mikko Ervasti. 
   
   "People are worried over Lumia sales. I think expectations for the third quarter will be cut," said Nordea analyst Sami Sarkamies. 
   
   The 10,000 job cuts, which include the closure of Nokia's only plant in its homeland Finland, bring total planned cuts at the group since Elop took over as chief executive in 2010 to more than 40,000 staff, or every third worker. 
   
   Of the latest job cuts, 3,700 will take place in Finland, where the firm will also close its plant in Salo - the last major cellphone manufacturing site in western Europe, the cradle of the global industry. 
   
   "This is a major blow. This is due to the operational mistakes made already during the previous CEOs. Maybe the signs of success are running low for Elop too," said Antti Rinne, chairman of labor union Pro. 
   
   Nokia said it expects its operating margin in the second quarter to be below the negative 3 percent level reported in the first quarter due to pressure on its smartphone business. It previously forecast it would be similar to or below that level. 
   
   On average analysts forecast the second-quarter phone unit margin to be at -4.6 percent, narrowing to -2.2 percent in the third quarter. 
   
   Nokia also said it would sell luxury phone business Vertu to venture firm EQT and revamp its management team. ($1 = 0.7953 euros) 
   
   (Additional reporting by Eero Vassinen and Terhi Kinnunen in Helsinki; Editing by Erica Billingham)
target: – Even rose-colored glasses can't make Nokia's situation look any brighter. The company today announced that it would cut another 10,000 jobs, which Reuters points out is one out of every five slots at its once-formidable global cellphone business. The news was accompanied by the warning that its main mobile devices unit would post an even bigger operating loss than expected, as Nokia faces competition from Apple and Google that it admits affected it "to a somewhat greater extent than previously expected," reports the Wall Street Journal. The cuts will be made by the end of 2013, and will add up to $2 billion in cost reductions by the end of that year. The overhaul, CEO Stephen Elop's biggest to date, extends to the top, with the company's CMO and heads of markets and mobile phones to step down by month-end. Bloomberg reports that sites in Finland, Germany, and Canada will also be shuttered, and notes that the stock has hit its lowest price since 1996. Since Elop took over in the fall of 2010, nearly 40,000 jobs have been eliminated; Nokia currently employs 122,000, some 53,000 of which work in its mobile devices unit.