Nokia's ( NOK) downbeat update Tuesday set a sour tone on two big wireless industry issues, growth and prices. The Finnish phone maker took its handset sales growth forecast down to 4% or lower for the year, a far cry from its original 8% projection. But even more disconcerting to Wall Street, Nokia said the average unit sales price will fall nearly 4%. While Nokia says it will continue to increase its overall handset market share from the 35% level last quarter, some investors are concerned that slack demand, SARS and competition from the likes of Samsung and Sanyo will cut into the company's lush 24% profit margins. Still, fans note that Nokia has a history of managing costs, i.e. pressuring suppliers, that plays to its advantage. "Nokia has always been able to squeeze margins out of the phones they make," says Friedman Billings Ramsey analyst Chris Versace, who has a neutral rating on the stock. FBR has no underwriting ties to Nokia. Nokia dropped 50 cents to $17.46.
Nokia's downward guidance comes a day after Motorola ( MOT) pointed to weak sales in Asia and lowered its financial targets. The Schaumburg, Ill., wireless-equipment giant blamed SARS and its outdated cell phones for most of its problems.