Last month, Nokia continued cost-cutting measures by starting its global Voluntary Resignation Package, which offered the first 1,000 employees who volunteered to leave severance packages. The company also encouraged employees to take holidays as time off instead of taking cash compensation.

Monday's announcement of 700 job cuts brings the total to 1,700. While the cuts will be global, Finland alone will see nearly 700 jobs eliminated.

Along with its handset unit, Nokia plans to cut jobs in sales, corporate development, marketing and in other global support functions. Last month it cut back production at its Salo facility in Finland.

Global Demand Down

Nokia executives say the cuts are part of the company's initial plans to adjust its business operations after its January 2008 acquisition of Symbian. Nokia acquired the remaining 52 percent of the company in an effort to better compete with Google's Android.

The most recent cuts, however, came because of slowed market demand. In January, the company announced a poor fourth quarter, with a 69 percent drop in profits. Nokia CEO Olli-Pekka Kallasvuo blamed the job cuts and lower profits on reduced demand for mobile handsets.

"I think the job cuts are a result of the very tough market environment and not necessarily a symptom of specific issues Nokia is facing," said Carolina Milanesi, a U.K.-based research director for mobile devices at Gartner. "It is clear that cost control is paramount today."

"Nokia needs to strengthen its high-end portfolio while continuing to deliver good value for money devices like the ones we saw in Barcelona," Milanesi said. She referred to Nokia's consumer-focused 6300, 6310 and N86 devices.

Looking Ahead

At the Mobile World Congress in Barcelona, Nokia also announced additions to its E series phones for business users, including the E61i, a BlackBerry competitor; the E65, a slider; and the E90, which has 3G connectivity and uses High Speed Downlink Packet Access (HSDPA) and integrated Wi-Fi. But Milanesi said Nokia needs to focus on its consumer-focused phones to be more competitive.

"Its strategy of driving smartphones in the mass-market price point is the right one as long as Nokia can catch up with the likes of Apple in the high end," she said.

Nokia said the outlook for the first quarter of 2009 also looks bleak. Mobile device sales will decline 10 percent from 2008, according to Nokia. Volumes in the first quarter are also expected to fall faster than in the first quarters of the past few years. Nokia's January-through-March earnings per share is expected to fall to its weakest level since the third quarter of 2001.