Nokia ( NOK) reminded investors Friday that it's always darkest before the dawn.

The struggling wireless giant said that contrary to the hopes of its many Wall Street fans, its sales numbers will have to get even worse this year before business finally picks up in earnest around year-end.

After the Finnish cell-phone giant handed Wall Street its second dose of disappointment this month, executives told analysts on a conference call Friday to brace for a rough ride as the company prepares to sacrifice profit margins to win back market share.

Unhappy with Nokia's performance and the harsh cure needed to regain its glory, investors continued a selling assault. The stock dropped $1.42, or 8.85%, to $14.63 Friday. Nokia shares have lost a third of their value since the company warned of a sales shortfall on April 6.

Nokia's stunning stumble comes at a time when worldwide demand for cell phones is at record levels, leaving little to blame outside of the company's stale lineup of handsets.

While Nokia still sells over a third of all cell phones in the world, the company lost 2 percentage points of market share in the first quarter as fickle fashions favored folding photo phones from outfits like Samsung and Motorola ( MOT).

CEO Jorma Ollila characterized the poor performance as an "architecture issue," presumably meaning that it takes a lot of time to make flip-open clamshell phones when all you've previously made are candy-bar shapes. But Ollila says the changes are well under way and that six of the 40 new phones coming this year will be folding models.

Short of declaring an all-out price war, Ollila said the company was "prepared to use the tactics available" to regain its dominant sales lead.

Ollila says the cut in projected earnings, to about 14 euro cents from 17 cents in the current quarter ending in June, is directly related to lower anticipated margins in the handset business. He also said total handset volume will increase slightly this quarter. When these factors are taken together, analysts say, Nokia is clearly ready to cut prices in order to sell more phones.

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