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Nokia to cut 3,500 jobs, close Romania plant

Nokia Oyj, the world's largest cellphone vendor by volume, is cutting 3,500 jobs in its second major restructuring move in a year, as it struggles with falling sales and profits.

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Nokia Oyj, the world's largest cellphone vendor by volume, is cutting 3,500 jobs in its second major restructuring move in a year, as it struggles with falling sales and profits.

Chief executive Stephen Elop, who took over at Nokia a year ago, unveiled the plans, including a factory closure and a new executive chairman for telecom gear joint venture Nokia Siemens Networks, on Thursday.

The company said it would close the Cluj factory in Romania, leading to 2,200 job losses, while a further 1,300 jobs would be cut at its Location & Commerce business unit, which includes the world's largest digital mapping business Navteq.

The latest redundancies come on top of plans set out in April to save 1 billion euros by measures including laying off 4,000 staff.

Nokia has struggled this year with falling sales and profits after the group said in February it would switch to Microsoft Corp software for its smartphones, but the first of these models will reach the market only later this year.

"We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger," Elop, Nokia's first foreign chief executive, said in a statement.

Nokia's share price has halved since it announced the Microsoft deal on worries the company will lose so much market share before the new phones come out that it might never make up lost ground.

Nokia's quarterly phone sales to end-June dropped 20 percent at a time when market grew 10 percent, and its 15-year reign at the top of the smartphone market ended as both Apple and Samsung Electronics surpassed it.

"Now the volume has come down, clearly Nokia is looking for new saving targets," said analyst Jari Honko from Swedbank in Helsinki.

The shares were up 1.4 percent at 4.34 euros by 0916 GMT, outperforming a flat sector index.

Elsewhere Nokia supplier Digia said it had agreed to cut 170 jobs in its Finnish operations, and could cut up to 80 more as it revamped its business.

Nokia also said it and Siemens AG will both inject 500 million euros ($680 million) into their 50:50 telecom gear joint venture Nokia Siemens Networks.

Jesper Ovesen would take over as executive chairman of Nokia Siemens Networks, replacing former Nokia CEO Olli-Pekka Kallasvuo, Nokia said.

Ovesen, who has worked as chief financial officer at many top Danish firms helped to turn Lego around during his spell as CFO of the toy group in 2003-2007 and took telecoms operator TDC public late last year.

Siemens and Nokia would like to take Nokia Siemens Networks public at some point, but the company has struggled to report profits, battling against aggressive rivals Huawei [HWT.UL] and Ericsson.

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