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Nokia Takes Strides

The CFO sees it grabbing 40% of the market.

Nokia

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likes the view from the top.

The No. 1 mobile phone maker says reaching 40% marketshare "is possible" given solid demand for its new phones and

Motorola's

(MOT)

retreat from the price war.

Speaking at the Lehman Brothers Worldwide Wireless and Wireline Conference in New York Wednesday, Nokia CFO Rick Simonson said gains won't cut into profits.

"We don't see a trade-off in market share and margin," said Simonson. He adds that "40% market share is possible, but we are going to make sure it's sustainable and drives margin and profitability."

Nokia's share of the world's phone market was 36% at the end of the first quarter, and earlier this month the company raised its market share guidance, calling for a sequential increase in the second quarter.

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The confidence stems largely from a reduction in Motorola phones that flooded the market last quarter, says Simonson. It was an "extraordinary" event, he says, with the No. 2 player putting a large amount of inventory in the channel.

Motorola's massive misfiring and desperate attempt to realign its business caused a major phone glut among distributors that Nokia says has returned to normal. Now that Motorola wants profit, not market share, all the players can benefit, says Simonson, referring to the ceasefire in the price war.

Asked about the hotly anticipated iPhone from

Apple

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due out next month, Simonson said it "presents real competition" for Nokia. But he says the multimedia minicomputer device also "further validates" the idea that people will pay more for these devices.

"People will pay more than $49," says Simonson.

The new Nokia N95 with a video and music player, 5-megapixel camera and full Web browser "is the best example of that," he says. Phones like these will be successful as they take sales from adjacent markets like digital cameras, iPods, and laptop computer sectors, he adds.

"We are already out there. We've been doing this. We aren't playing catch up," says Simonson, referring to the looming iPhone threat. "We'll take competition as it comes."

Nokia shares rose 44 cents to $26.91 in early trading Wednesday.