March 17 (Bloomberg) -- Nokia Oyj, the world’s biggest maker of mobile phones, plans to cut 1,700 jobs in sales, marketing and some management functions to adapt to falling consumer demand.

The company, based in Espoo, Finland, will start talks with unions about the cutbacks, Nokia said in a release today. About 700 workers in Finland will likely lose their jobs, spokeswoman Eija-Riitta Huovinen said by telephone, as Nokia forecasts a 10 percent slide in industry sales this year. Nokia had 128,445 employees at the end of 2008.

Nokia sold 15 percent fewer phones in the fourth quarter than a year earlier and cut its industry sales forecast in January for the third time in about three months. Competitor Sony Ericsson Mobile Communications Ltd. said in January it probably won’t return to profit before the second half, as fewer people buy new mobile phones in the global economic recession.

“It’s a sign the mobile phone market is still deteriorating,” said Mauritz Redin, Stockholm-based head of equities at Alfred Berg AB, which manages $27 billion in assets. “That they were going to reduce headcount, and the size of the cutback, were pretty much as expected.”

Nokia has lost more than half its market value in a year, declining 55 percent. That’s less than U.S. competitor Motorola Inc., which has lost 61 percent in 12 months. The two companies led the global mobile-phone industry to a decline in sales in the fourth quarter as the slump in consumer demand spread worldwide, according to research firm Strategy Analytics Inc. in January.

The Finnish company’s stock declined as much as 0.33 euros, or 3.7 percent, to 8.66 euros in Helsinki, and traded at 8.77 euros as of 1:45 p.m. local time.

Severance Packages

Nokia said Jan. 22 that it aims to reduce annual costs at devices and services by more than 700 million euros ($909 million) by the end of 2010 after slashing its dividend for the first time in seven years. A month later, Nokia said it would offer resignation packages to employees and encourage them to take unpaid leave to cut costs.

The packages are available to all employees, excluding senior executives and factory workers, Nokia said at the time, with a goal to eliminate 1,000 jobs.

Chief Financial Officer Rick Simonson said in January Nokia cut its dividend and put share buybacks on hold to reflect lower earnings and preserve cash. Nokia sold 1.75 billion euros in bonds earlier this year to raise additional funds.

“Nokia continues to seek savings in operational expenses, looking at all areas and activities across the company,” Nokia said in today’s release.

To contact the reporter responsible for this story: Chad Thomas in Helsinki at cthomas16@bloomberg.net.

Last Updated: March 17, 2009 07:47 EDT