Nokia has announced plans to cut up to 10,000 jobs – almost a fifth of its workforce – by the end of next year, in an attempt to reduce its costs.  It also says that Q2 losses from its Devices & Services unit will be greater than previously advised.

Among those leaving the company are a number of senior executives, including chief marketing officer, Jerri DeVard; EVP of mobile phones, Mary McDowell; and EVP of markets, Niklas Savander. DeVard is replaced by Tuula Rytila, who joins Nokia as senior vice president of marketing and chief marketing officer. McDowell is replaced by Timo Toikkanen. Other new hires include Juha Putkiranta, who joins as EVPO of operations; Chris Weber (EVP, sales and marketing); and Susan Sheehan (senior vice president of communications.

As part of the cuts, Nokia is closing its R&D facilities in Ulm, Germany and Burnaby, Canada, and its factory in Salo, Finland. It is also selling its luxury handset brand, Vertu, to EQT VI, a European private equity firm. Nokia says it wants to reduce its Devices & Services operating expenses to an annualized run rate of approximately €3bn by the end of 2013, compared to €5.35bn for the full year 2010.

The company says it will invest in its Lumia smartphone line, and in location-based services “as an area of competitive differentiation for Nokia products”. It says also that it will extend its location-based platform to new industries.

“These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokias long-term competitive strength,” says Nokia CEO, Stephen Elop. “We do not make plans that may impact our employees lightly, and as a company we will work tirelessly to ensure that those at risk are offered the support, options and advice necessary to find new opportunities.”