Nokia Warns of Weaker Q3, Global Economy and iPhone are Factors

by , 4:10 PM EDT, September 5th, 2008

Nokia is citing stiff competition, sluggish growth due to the global economy and a production glitch as contributors to a weaker third quarter. The company also announced that it would lose market share, and the news sent Nokia's stock tumbling 9 percent lower.

The company pointed to aggressive price cuts by some of its low end rivals and a global economy that could force some customers to scale back plans for new purchases. The problem could last well into 2009, according to analysts in a MarketWatch story on Friday.

Nokia didn't say how much market share they expect to lose, but suggested it would be small. Matthew Hoffman of Cowen & Co, reduced his projection from 129 million to 120 million unit shipments for Q3 and said: "We believe aggressive pricing from [companies] such as Samsung and share loss to Apple are behind new guidance for share loss," he wrote in a note to investors.

Nokia doesn't believe that any one source is to blame, competition and markets, and reiterated that the market share loss isn't large.

Other mobile phone manufacturers are also experiencing sluggish sales in Asia thanks good to economic conditions in China. Nokia and Motorola are losing market share there due to domestic manufacturers ZTE and Huawei flooding the market with cheap phones.

Apple, which focuses on the high end smartphone market, has still not landed a deal with China Mobile. If it does, the company is not likely to be affected by the macroeconomic conditions and cheap phone markets as Nokia has.