Nokia Cuts Forecasts for Key Unit, Shares Plummet

Company cites the competitive environment for expensive cellphones

Shares in the world's top mobile phone maker Nokia plunged nearly 11% on June 16 after it slashed its second-quarter and full-year forecasts for its key devices and services unit.

"During the second quarter 2010, multiple factors are negatively impacting Nokia's business to a greater extent than previously expected," Nokia said, citing the competitive environment for expensive cellphones and shifts in product mix towards "somewhat lower gross margin" phones.

Nokia said it expected sales in the devices and services unit to be "at the lower end of, or slightly below" the 6.7-billion-euro (US$8.2 billion) to 7.2-billion-euro range it had previously given for the April-June period.

It said the unit's operating margin would also be at the lower end or slightly below the range of 9%-12% previously given for the second quarter, and in the full year it would be at the lower end or below its previously given target of 11%-13%.

For the full year, Nokia said it expected its mobile device value market share to fall slightly from 2009. It had previously forecast a slight increase.

Nokia is due to release its second quarter results on July 22.

Copyright Agence France-Presse, 2010

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