Nokia shocks with weak Q3 forecast

Shares in Nokia tumbled after the phone maker shocked the markets by predictung that its third quarter global market share will decline from second-quarter levels because of aggressive price cuts by its rivals, an Associated Press report said.

In July the company, the world's top mobile phone maker, had predicted that its market share would about the same in the two quarters, about 40%, the Associated Press report said.

Nokia said it was losing share because of its 'tactical decision' not to match the aggressive price cuts of some of its competitors, seeking instead to be 'sustainably profitable in the longer term.' It also cited tough competition in emerging markets and a slow 'ramp-up of a mid-range Nokia device.'

Nokia's shares fell 9.5% in trading in Helsinki, and its US shares slid €1.17 (US$1.69), 7.6%, at €14.3 (US$20.62) last week.

The Associated Press report further said Nokia was upbeat about the rest of 2008, saying it still aimed to increase its market share for the year. It already sells more phones than its three main rivals combined.

But the company's share price has plunged about 40% this year amid concerns the mobile industry would suffer as the credit crunch and inflation take a toll on economic growth and consumers' spending power.

Also, the closely watched average selling price of Nokia handsets has continued to fall, because of higher volumes of cheaper phones sold in emerging markets and a negative impact of the weak dollar.