Nokia's is a classic success story. Its evolution from a lumber company to a conglomerate engaged in manufacturing rubber, cable and televisions, to being a world renowned telecom giant is unmatched in the business landscape.

Over the years, the company has moved towards the `mobile' vision, of being the world's largest cellphone maker with about 40% of global market sharea figure that is more than the combined share of its next three competitors. Nokia's efficient manufacturing and distribution that allow it to quickly churn out products at a low cost, has seen its profits rise over the years. It outpaced Motorola in 1998 to become the most profitable company largely due to its cost efficiency and economies of scale. Since then, the company consistently outperformed its competitors and grabbed the market share in the world markets. It has about 38% share of the global mobile phone marketa figure it expects to raise in the second quarter of this year.

Nokia's problems reflect the problems of the telecommunications industry as a whole. The industry has been reeling under the burden of massive debts accumulated as a result of heavy and unyielding investments in third generation (3G) mobile services and mindless acquisitions. On top of that the demand side of the equation is equally grim.

Even though, in the first quarter of this year, Nokia clocked a 13% increase in profits, to the tune of 977 mn ($1.07 bn) in the first three months, due to surging sales of its Oyj division, and all news at this Finnish conglomerate is not so good. It has slashed around 1,800 jobs and closed down some projects to counter the losses in its wireless network equipment business. The division that posted an operating loss of 127 mn, compared to a profit of 146 mn, is the sour spot of Nokia's businesses. The division has been severely hit as mobile phone carriers have cut spending on telecommunications equipment after a period of huge investments for acquisitions and getting new licenses. As a result of the slump in demand, the overall sales of the division was also lower at 6.7 bn as against 7 bn a year ago. This problem is common to all equipment makers, but Nokia is particularly hurt because the losses at the equipment division are compounded by the fall in mobile phone shipments.

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