Nokia

(NOK) - Get Report

said it plans to cut 300 employees from its infrastructure arm, highlighting the slump in demand for wireless-network equipment.

The Finland-based handset giant said the layoffs will affect Finnish workers employed in Nokia Networks' mobile-radio division. Nokia Networks employs 19,000 workers worldwide.

"As the market for Tetra

professional mobile-radio systems has taken off slower than previously anticipated, resources need to be adjusted accordingly," the company said.

Nokia shares were down 17 cents, or 1.3%, at $13.32 in late-morning trading Tuesday, during a sector-wide selloff. Separately, ADRs of communications-equipment maker

Ericsson

(ERICY)

were down 4 cents, or 7.4%, to 52.8 cents.

Nokia reduced its forecasts for Nokia Networks a week ago during its midquarter earnings update. Operating margins for the division are now expected to be as low as 5% for the third quarter. Nokia also lowered its third-quarter sales outlook for the entire company at that time. Sales are expected to be $6.88 billion to $7.17 billion (7.1 billion euros to 7.4 billion euros), down from an earlier estimate of $6.97 billion to $7.36 billion.

In 2001, the networks division accounted for less than one-quarter of the company's net sales.