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Nokia earnings dip boost to rivals


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As Nokia stumbles, rivals are grabbing market share.

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HELSINKI, Finland -- Mobile phone giant Nokia warned Friday second-quarter earnings would fall and sales could also drop as it continues to struggle with a patchy handset portfolio and fierce competition.

The world's biggest mobile phone maker said second-quarter earnings per share (EPS) would be between 0.13-0.15 euros -- below the underlying figure of some 0.19 euros from a year ago and below all expectations in a Reuters poll that called for an EPS of 0.18 euros.

Nokia shares plunged shortly after the 1000 GMT announcement. They ended the day down 8 percent in Helsinki at 12.4 euros after hitting their lowest level in more than a year.

CNN's Jim Boulden said the figures disappointed stock markets but were a boost to Nokia's competitors.

The outlook confirms analysts' fears that Nokia, which makes more than one in three handsets sold globally, could lose more market share to rivals like U.S. Motorola and Korea's Samsung Electronics, which earlier on Friday posted record earnings. (Full story)

Samsung said earlier it expects its market share in January-March to have risen by almost four percentage points to 14 percent, with sales to continue rising in the second quarter.

The Finnish firm posted January-March EPS of 0.17 euros, above an underlying 0.16 euros from a year ago and in line with a warning from April 6 that spooked investors as Nokia admitted it could not grow its profits quickly despite a booming market.

"It does not look good. It is obvious that they are losing market share on mobile phones, and the guidance indicates that next quarter will be worse than we expected," analyst Urban Ekelund at Redeye told Reuters.

"The company will not be able to turn this around overnight, I think the share price will drop further from these levels," he said.

At 1040 GMT Nokia shares were off 7.3 percent at 12.50 euros, dragging the Dow Jones Stoxx technology index 1.7 percent into the red. They had earlier touched a 13-month low at 12.22 euros.

Figures echo warning

Nokia said group sales would be flat to lower in the second quarter versus expectations of a fall of three percent in the poll, as rivals exploit Nokia's weak offering of mid-priced phones with colour-screen and camera models of their own.

Nokia CEO Jorma Ollila reiterated that the firm aimed for a 40 percent share of the mobile phone market, but analysts said that looked daunting at present.

"Nokia's main priority must now be to stabilise its market share by Q3 and hope that it can reverse the current decline in Q4," Ben Wood at Gartner Dataquest told Reuters.

"In the face of aggressive competition from Motorola, Samsung, LG and Siemens this is going ot be a challenging goal to achieve."


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