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"Consumers are continuing dramatically to cut back their spending," Nokia chief financial officer Rick Simonson told the audience at the company's investor day in New York, adding that he was under "no illusions" the market would recover any time soon.

"We're facing it across the world. What's recently accelerated is the slowdown in emerging markets."

Simson said he

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expected handset market volumes to fall by at least 5% next year, but admitted the company has no clear idea of what could happen. However he said Nokia was in a good position to weather the downturn because of the large scale of its global business.

He also anticipated winning back market share from RIM and Apple. Simonson said that the smartphone market should grow in 2009, but he did not give a specific estimate.

"2009 will be challenging for our industry; however we have a strong, enviable base to build on, and I believe we will continue to strengthen our position on many fronts," Nokia chief executive Olli-Pekka Kallasvuo says in a statement.

"Building on our operational flexibility, Nokia is acting to reduce costs appropriately in the current slowing environment."

In the meantime fourth quarter earnings will suffer, as Nokia has not been able to cut costs quickly enough in response to the rapid deterioration of the handset market.