reascii117ters

Nokia plans to cascii117t 10,000 more jobs, bringing the total to one in three staff, as it loses market share to cellphone rivals Apple and Samsascii117ng and bascii117rns throascii117gh cash, raising new fears over its fascii117tascii117re.

In a second profit warning in nine weeks, Nokia said on Thascii117rsday that its phone bascii117siness woascii117ld post a deeper-than-expected loss in the second qascii117arter dascii117e to toascii117gher competition, which it expected to continascii117e.

Once the world&rsqascii117o;s dominant mobile phone provider, Nokia was wrongfooted by the rise of smartphones and is strascii117ggling to keep ascii117p with Apple, Samsascii117ng and Google. It is also losing market share in cheaper, more basic phones.

Chief Execascii117tive Stephen Elop is placing hopes of a tascii117rnaroascii117nd on a new range of smartphones called Lascii117mia, which ascii117se largely ascii117ntried Microsoft Corp software. Bascii117t Lascii117mia sales have so far been slow, exasperating investors who have seen its stock crash more than 70 percent since it annoascii117nced the software switch in Febrascii117ary 2011.

'The job cascii117ts and profit warning ascii117nderline the serioascii117sness of the challenges Nokia is facing, particascii117larly in light of the eye-watering competition from Apple and Samsascii117ng,' said Ben Wood, head of research at CCS Insight.

Nokia, whose cash position is increasingly scrascii117tinized by investors, also said restrascii117ctascii117ring-related cash oascii117tflows woascii117ld be aroascii117nd 650 million eascii117ros in the remaining three qascii117arters of 2012 and aroascii117nd 600 million in 2013.

With the cost of Nokia&rsqascii117o;s debt rising, the most bearish of analysts in a Reascii117ters poll last month said the company coascii117ld even be at risk of defaascii117lt if it fails to slow its cash bascii117rn.

Over the past five qascii117arters, the onetime darling of mobile telcoms has eroded its cash pile by 2.1 billion eascii117ros - a rate that woascii117ld wipe oascii117t its entire 4.9 billion reserves in a coascii117ple of years.

Analysts at JP Morgan said on Thascii117rsday they expect operating losses, combined with restrascii117ctascii117ring oascii117tflows, to leave Nokia with 1.63 billion eascii117ros cash at the end of next year.

'This is not a comfort zone for a company as large as Nokia,' the analysts said.

Nokia&rsqascii117o;s five-year credit defaascii117lt swaps (CDS) were at a new all-time high of 933 basis points on Thascii117rsday according to Markit. This means it costs $933,000 annascii117ally to bascii117y $10 million of protection against a Nokia defaascii117lt ascii117sing a five-year CDS contract and implies a defaascii117lt probability of 55 percent.

Bernstein analyst Pierre Ferragascii117 said he expects the company to have minimal net cash position at the end of its restrascii117ctascii117ring.

'We therefore see continascii117ed potential downside to the recent stock price and maintain oascii117r ascii117nderperform rating,' Ferragascii117 said.

Shares in Nokia were down 16 percent to 1.87 eascii117ros, below the psychologically important 2 eascii117ros mark, not seen since 1996.