Nokia warns on Q3 as price war bites, shares drop

The world's top mobile phone maker Nokia warned it would lose market share this quarter as it refused to participate in a price war waged by some rivals to combat weak economies, hitting its shares.
Nokia's third-quarter market share would be lower than the 40% it had in the second, it said on Friday, cutting a previous forecast to hold its share steady. It added it would ramp up one of its mid-range models more slowly than planned.
"In certain markets and in certain areas, including in some of the low end, we are meeting certain aggressive pricing that we believe may not be sustainable," Chief Financial Officer Eric Simonsen told analysts and journalists on a conference call.
"So it really is not margins. What we're talking about is units here," he added.
Shares in the Finnish handset maker fell 10.7% to 13.99 euros by 1321 GMT, their lowest level since late 2005, dragging the DJ European technology index down more than 5%.
"Nokia expects the overall mobile device market in 2008 to be impacted by the weaker consumer confidence in multiple markets," it said.
It added, though, that it still expected the market to grow at least 10% in terms of shipments and saw third-quarter volumes up from the second quarter, for the wider market.
"I think the share reaction is a bit much," said Redeye analyst Greger Johansson. "It seems to be their own decisions to a large extent."
Michael Schroder, analyst at Glitnir, also saw a silver lining: "Positive is that it still sees market volumes being up from the previous quarter and that it still sees full-year market volumes up 10% or more," he said.