Nokia's

(NOK) - Get Report

midquarter update Tuesday is likely to reflect weakening demand amid an uncertain economy and looming war with Iraq.

The world's largest handset manufacturer is expected to affirm its earnings target of 15 to 19 euro cents (16 to 21 U.S. cents) a share for the first quarter, but the company is likely to cut its sales guidance to the lower end of its prior range. Nokia told analysts at the end of January that quarterly sales will be flat to 9% better than the same period last year, when sales were 8.78 million euros.

Wall Street analysts expect Nokia to tell investors that the average selling prices of phones will be lower in the quarter, as consumers spend less on new features amid the economic slowdown and threat of war.

Nonetheless, UBS Warburg wireless-equipment analyst Jeffrey Schlesinger said that although the average selling prices of phones will continue to hamper investment enthusiasm, these concerns have been factored into the stock price.

Other issues also dog Nokia. A recent Gartner Dataquest study indicated that while Nokia gained market share last year, two trends may be working against the company. First, Gartner says, carriers worldwide may steer consumers toward some of Nokia's competitors to offset the company's dominance in some markets. Separately, Nokia remains a latecomer in the market for code division multiple access services, with less than a handful of models geared toward the CDMA technology.

Indeed, by some accounts, CDMA is gaining steam in markets across the globe.

Qualcomm

(QCOM) - Get Report

, the company that created the technology and manufactures CDMA chips, has raised its chip-shipment guidance over the past two quarters. It

raised it again Monday morning for the current quarter. CDMA is the predominant wireless technology standard in the U.S. and is used by carriers

Verizon Wireless

and

Sprint PCS

(PCS)

.

J.P. Morgan and Commerzbank Securities raised their rating on Nokia shares Friday, arguing that the company's valuation makes it a compelling investment. But looming concerns have kept shares depressed.

Nokia American Depositary Receipts fell 14 cents, or 1.1%, to $12.80 in late trading Monday.