Nokia to slash mobile phone production

Announcement comes after Nokia revealed its net profit for the last three months of 2008 was down 69 percent year-on-year.

Nokia has announced it will reduce production of mobile phones due to falling demand.

Sales of mobile phones are expected to fall this year as the credit crunch reduces the amount of disposable income consumers have to spend on gadgets and technology. Nokia said the move, which will take place at its plant in Salo, Finland, would save around EUR700m in costs.

Nokia said the factory's 2,500 staff would all be temporarily laid-off for a short period of time on a rotational basis, with 20 to 30 percent of the staff unemployed at any one time. The company also said it would be looking to cut costs in other areas of production process.

Nokia is cutting production for mobile phones such as the N96.

"With these plans, we aim to scale down Salo production to reflect reduced market demand, while operations in the factory continue uninterrupted," Juha Putkiranta said.

The announcement comes after Nokia revealed its net profit for the last three months of 2008 was down 69 percent year-on-year to EUR576 million. It also said ales dropped 19 percent to EUR12.7bn.

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Carrie-Ann Skinner

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