Updated from 10:15 a.m. EDT

Nokia ( NOK) shares slid after the company issued what investors perceived as a cautious forecast for wireless-handset and network-equipment sales.

The company said it expects the global industry for mobile handsets to grow by 10% in 2003, to 440 million phones shipped to customers. Investors took the news as a reality check a day after Merrill Lynch issued more bullish projections for the next two years.

Nokia had said previously that it expects 10% to 15% growth over the next few years, so investors also perceived Nokia's latest statement as a subtle retreat from those earlier estimates.

The company added that the industry for wireless infrastructure equipment remains "challenging ... as operators focus on cash flow while cutting back on investments." It expects the market for equipment to decline 20% overall this year, with its own network business declining a more moderate 15%. For next year, the company expects the overall market for equipment to decline 10%, with its own business declining 5% to 10%.

As a result, shares of the world's largest handset manufacturer were down nearly 4% at $19.35 in midday trading. Motorola ( MOT) shares also were down, losing 8.2% to $10.74. Shares of chipmaker Texas Instruments also got whacked after Nokia's projections, sinking 3.4% to $19.09.

While Nokia didn't indicate exactly how many handsets it plans to ship next year, the company said that about 50 million to 100 million of its phones will be color handsets. Ten percent of the color phones will be built with Nokia's Series 60 smartphone operating system. Nokia also said it expects to widen its lead against rivals as it nears its goal of 40% market share. At the end of the third quarter, Nokia earned a 36% market share, according to a Gartner Dataquest study released last week.

"Obviously, we will then need to look at new heights to reach," Nokia Chief Executive Jorma Ollila told reporters at an investor conference.

Nokia's development of code division multiple access, or CDMA, technology will play a key role in the company's growth projections in 2003. The technology was created by Qualcomm and has become the predominant standard in the U.S., employed by carriers such as Verizon Wireless and Sprint PCS ( PCS). Until recently, Nokia has avoided the CDMA market, which makes up more than 10% of the global market. But strong interest and growth in next-generation CDMA networks in Japan, China and the U.S. have forced Nokia into uncharted territory.

The CDMA market "has been something that is very very sour for us," conceded Nokia's executive vice president of mobile phones, Anssi Vanjoki, at the conference. "To get traction in CDMA, it's not something that's magic -- it's a lot of hard work. We have taken challenge of CDMA and really tried to align our processes with the processes of the marketplace." Vanjoki added, "Our strategic intent is clearer than ever." In the U.S., Nokia announced last week that it plans to begin selling a CDMA-based phone on the Sprint PCS network. It currently sells only five CDMA handsets, three of which operate on next-generation CDMA2000 1X networks. Color models aren't due until next year.

Sales in China and other emerging global markets also will play a more important role in the coming year, executives said. While Nokia remains the leading worldwide handset manufacturer, Motorola claims the top spot in China. (Globally, Motorola is the second-largest handset manufacturer by a wide margin.) "We have been working very actively to change the distribution structure," Vanjoki told investors, alluding to a revamp of its business in the region. "With introduction of two product lines for the Chinese marketplace, we expect to see an improvement in gaining share in China."

Emerging business regions such as China will drive new subscriptions, the company said. Despite indications that new subscribers worldwide are harder to find, the company said it sees light at the end of the tunnel. It told investors it expects global mobile-phone subscriptions to grow by 36% to 1.5 billion subscribers next year, from an estimated 1.1 billion in 2002.