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HELSINKI : Shares in Nokia, the world's biggest maker of mobile handsets, shed nearly 10 percent of their value on Friday after the Finnish group cut its forecast for its market share in the third quarter.
"Nokia now expects its mobile device market share in the third quarter 2008 to be lower than in the second quarter 2008," the company said in a statement that also pointed to pricing pressure and production problems.
Reflecting slowing economic growth worldwide and recession fears in many economies, the group added: "Nokia expects the overall mobile device market in 2008 to be impacted by the weaker consumer confidence in multiple markets."
In mid-July the mobile phone maker said its market share had risen to 40 percent in the second quarter and forecast that it would remain more or less at the same level in the current three-month period.
Nokia shares plummeted following the announcement and closed 9.6 percent lower at 14.20 euros (20.25 dollars) on the Helsinki stock exchange.
Nokia's chief financial officer Rick Simonson told a conference call Friday that the company's market share "would be somewhat down" but "we are not talking about several points here."
An analyst at Glitnir Bank, Mikael Schroeder, told AFP that he expected the mobile phone giant to report third-quarter market share of about 38 percent.
"The really bad surprise was that Nokia's market share in the current quarter will fall by more than a couple of decimals, as volumes are expected to fall," he said.
"Increasing market share requires a lot of work and it grows little by little, but now (Nokia) is losing two percentage points at once," he said.
Last week research institute Gartner predicted growth in global sales of handsets would fall sharply this year as consumers face higher food and fuel prices and overall high inflation.
The US-based industry research unit forecast 11 percent growth in global sales to 1.28 billion units this year, down from a rise of 16 percent in 2007.
Nokia said it had faced aggressive pricing by its competitors, while it had had problems ramping up production of its new mid-range cellular phones.
"We expect the product launches and start of shipments to be on track during the remainder of the third quarter and the fourth quarter 2008," it said.
The Finnish handset maker has been more profitable than its biggest rivals such as Samsung and LG, since its large volumes give it pricing power.
But analysts said Nokia, whose success is largely based on the sale of cheap phones in emerging markets such as China and India, had probably decided not to sacrifice its margins by cutting prices further.
"The price war is probably concentrated on cheap mobile phones. For instance Chinese phone makers have been aggressive in pricing," Pohjola Bank analyst Hannu Rauhala told AFP.
Nokia reiterated its commitment to increasing its market share for the full year and forecast that industry volumes overall would grow 10 percent or more from the around 1.14 billion units estimated to have been sold in 2007.
- AFP /ls
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