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Nokia Corp. on Thursday cut its forecast for the global handset market for the second time in three weeks, warning that the industry slowdown has hit more rapidly than expected as consumers cut spending.

To offset the sales slump, the world's largest mobile-phone maker said it would cut costs next year and in 2010.

Nokia said it expects fewer than 330 million phones to be sold world-wide in the fourth quarter, lower than the estimate it gave Nov. 14 when it issued a profit warning. Next year's volumes are expected to fall 5% or more from 2008 levels, the Finland-based company said.

The phone maker said it targets an increase in market share next year, including in the smartphone segment. However, it said it wasn't sure it could deliver a gain in market share in the fourth quarter from the third quarter's 38% level.

Next year "will be a challenging year for the mobile-devices industry, but I believe Nokia will fare much better than our competitors," Nokia Chief Executive Olli-Pekka Kallasvuo told analysts Thursday during the company's investor-day event in New York.

Though consumers are likely to trade down to less-expensive cellphones in the coming tough times, Mr. Kallasvuo said Nokia is in the best position to handle a potential transition because of its wide portfolio.

The downturn also presents a good opportunity to gain market share, Mr. Kallasvuo added. Aside from Nokia's presence in still fast-growing markets, the CEO pointed to the U.S. and South Korea -- two lucrative markets with little Nokia presence -- as opportunities.

Nokia said the slowdown is hitting operations across its markets, but the recent incremental downturn in emerging markets has grown more pronounced. Nokia's high-volume sales are largely dependent on markets such as India and China.

The latest warning underscores the "rapid change" in consumer spending Nokia previously flagged, and the damage it is causing to cellphone makers and operators.

Earlier this month, Vodafone Group PLC, the world's largest mobile operator by revenue, warned full-year revenue would fall short of its forecasts and unveiled plans to cut 1 billion GBP ($1.48 billion) in costs.

Meanwhile, Dallas-based AT&T Inc. said Thursday it will cut about 12,000 jobs, or 4% of its work force, through the end of next year.

The cellphone market has contracted once before, in 2000-2001, but analysts expect the coming slowdown to be deeper.

Nokia is "acting on all fronts to reduce our costs," said Rick Simonson, Nokia's chief financial officer, including reducing the cost of goods sold and cutting operating and capital expenditures. "Nokia's highly variable, low-fixed-cost business model allows us to scale to a declining market," Mr. Simonson said.

Nokia said it now expects its key device and services operating margin to be between 13% and 19% next year, down from its previous target of 20%, while it expects its venture with Siemens AG, Nokia Siemens Networks, to have an operating margin in the single digits in 2009. Its recently added Navteq digital-mapping unit should have a margin just above its device and services business, it said.

Separately, research firm Gartner Inc. said Nokia's share of the smartphone market in the third quarter fell to 42.4% from 48.7% in the year-earlier period, hurt by the lack of a commercial touch-screen device.

Mr. Kallasvuo acknowledged that the company's smartphone portfolio wasn't "ideal" earlier in the year.

Nokia is expected to get a sales boost from its recently announced N97 touch screen, its flagship product; however, the product won't be ready until the first half of next year. The N97 will compete with Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry.

Smartphone sales growth is suffering because of the economic downturn, Gartner said. In the third quarter, 36.5 million smartphones were sold -- a 12% increase from a year earlier, but a slowdown from the 16% annual growth experienced in the second quarter.