Nokia Expects Market Share to Slip

Shares of Nokia (NOK Quote) tumbled Friday after the handset maker said it expects its market share to slip in the third quarter because of weaker consumer confidence in multiple markets.

The Finnish mobile-phone giant said a decline in market share in the third quarter is from multiple factors, including the company's decision to not meet certain aggressive pricing of its rivals. Nokia also cited overall market competition and the temporary impact of a slower ramp-up of a mid-range Nokia device.

"Nokia's strategy is to take market share only when the company believes it to be sustainably profitable in the longer term," the company said in a statement. "Nokia has not broadly participated in the recent aggressive pricing activity -- as it believes that the negative impact to profitability would outweigh any short-term incremental benefits to device unit sales."

Shares fell $2.28, or 10.2%, to $20.03. Nokia shares are now down more than 42% for the year. Nokia will report its third-quarter results on Oct. 16.

In the company's second-quarter earnings report, Nokia said it expected industry mobile device volumes in the third quarter to be up sequentially, and for its market share to remain the same in the third quarter.

"They made a notable tactical blunder in guiding third-quarter market share even with the second-quarter level, which was at an all-time high," says Tero Kuittinen, senior executive director of global equity research with Global Crown Capital. "The comment about consumer confidence impacting phone market sounds like a reference to European handset market -- the back-to-school season has been off to a bad start, and now we get a confirmation of that."