Nokia Naysayers Spy Pricing Pressure

Wall Street is worried about mighty Nokia's (NOK) weakening handset prices.

Nokia's midquarter update earlier Tuesday offered up a snapshot of the wireless king's progress that was mostly in line with expectations. But on a subsequent conference call with analysts, the looming issue was a continuing drop in the average selling price of the company's phones.

Though Nokia fans were able to point to widening profit margins and healthy handset volume growth, skeptics say the falling unit prices reveal a troubling trend. They suggest the handset king is straining to maintain its market dominance. Investors, catching wind of the price chatter, sent Nokia shares down 90 cents, or 5%, to $16.17 Tuesday.

The big Finn phone maker projected annual and sequential declines in its so-called ASP, or per-phone average selling price, for the third quarter. Lehman Brothers analyst Tim Luke estimates that price at around $145, or about 16% below year-ago levels.

Company executives on a conference call Tuesday blamed a weak dollar and a higher percentage of sales in North and South America, where Nokia's lower-priced cell phones are more popular.

But some analysts and investors say while Nokia is making good headway in new markets like Russia and Brazil, it is losing market share in the higher-priced phone markets like Europe.