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Sat, Sep 06, 2008 - Page 10 News List

Nokia expects its third-quarter global market share to fall

FORECAST The reasons for the expected Q3 drop include a decision to not meet certain aggressive pricing of some rivals, the handset manufacturer said

AP , HELSINKI

Nokia said yesterday it expects global market share in the third quarter to be lower than in the second quarter because of aggressive pricing by competitors. Its share price tumbled 11 percent.

The world’s top handset maker gave no figures, but in July had predicted “its mobile device market share in the third quarter 2008 to be approximately at the same level sequentially” as during the second quarter.

In April through June, Nokia sold 122 million phones — with a global market share of 40 percent.

The company’s shares yesterday plunged 11 percent to 13.97 euros (US$20.24) on the Helsinki Stock Exchange.

Nokia said the reason for an expected fall in market share included “Nokia’s tactical decision to not meet certain aggressive pricing of some competitors.”

It also said it was hit by “the overall market competition, including the entry markets, and the temporary impact of a slower ramp-up of a mid-range Nokia device.”

The company said it would continue to be guided by a policy that is “sustainably profitable in the longer term.”

But it was upbeat about the rest of the year, saying it will continue to target an increase in “its market share in mobile devices for the full year 2008.”

It gave no figures.

Nokia said that although economic gloom would also affect global phone sales, it “continues to expect industry mobile device volumes in 2008 to grow 10 percent or more from the approximately 1.14 billion units Nokia estimated for 2007.”

Although Nokia has reached its long-stated goal of 40 percent market share, it has vouched to continue to aim for higher growth.

But the company’s share price has plunged about 40 percent this year amid concerns the mobile industry would suffer as the credit crunch and inflation take their toll on economic growth and consumers’ spending power.

Also, the closely watched average selling price of Nokia handsets has continued to fall because of higher volumes of cheaper phones sold in emerging markets and a negative impact of the weak dollar.

In the second quarter, the average price for a Nokia phone was 74 euros, down from 79 euros in the first quarter of the year and 90 euros in the second quarter of last year.

Chief financial officer Rick Simonson told The Associated Press in July that more than half of the 122 million Nokia handsets sold in the quarter were low-end phones with an average selling price of US$80 or less.

Simonson also said that cellphones had become such an everyday item in people’s lives that he predicted a 10 percent growth worldwide “with half a year visibility.”

Nokia is due to report its third-quarter 2008 results on Oct. 16.

Last year, Nokia sold nearly 440 million handsets, accounting for 40 percent of all global cellphone sales. It is based in Espoo near the Finnish capital and employs 116,000 people worldwide.

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