Nokia cuts forecasts for key unit, shares plummet

Nokia cuts forecasts for key unit, shares plummet

Helsinki: Shares in the world’s top mobile phone maker Nokia plunged nearly 11% Wednesday 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 in a statement, 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 ($8.2 billion) to €7.2 billion 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 to 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 to 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.

Shares in Nokia were slammed on the news and by 1230 GMT traded 10.98 % lower at €7.06 on a Helsinki bourse down about 2%.

The stock had already been shaken by market whispers of a profit warning that emerged last week. In June 2000, the shares hit an all-time-high of €65 in the midst of the bubble.

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