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(NOK) - Get Nokia Oyj Report

express ground to a halt Thursday as wireless-sector investors confronted a strange new emotion: uncertainty.

The fundamental story on the wireless-phone industry has been strongly bullish, on the reasoning that cell-phone use is expanding so quickly that all the handset and chipmakers will face a surfeit of demand for years to come. Investors in the sector, who have bid up these stocks enthusiastically, have been looking out for capacity bottlenecks, while ignoring the seemingly distant prospect that sales would slow on their own.

But reality isn't playing along. After Nokia's third-quarter

earnings warning drove wireless and

chip stocks down sharply Thursday, some observers were noting the recent lukewarm results throughout the sector, and wondering how strong the wireless thesis really is. At the very least, Nokia, a longtime favorite stock, will face a rough patch as investors mull its failure to satisfy investors' high-pitched expectations.

The Letdown

Nokia's announcement that third-quarter earnings per share will fall short of expectations, due to the "timing of new product introductions

and seasonality," represents at the very least a lost opportunity for Nokia, according to

Wit SoundView

analyst Matthew Hoffman, who issued a report last month warning of a slowdown. "Nokia is poorly positioned," he says, in relation to rivals





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. "They're late with a product, while other people have it," he continues, referring to Nokia's slow rollout of cheap-to-midpriced, Internet-enabled phones. Nonetheless, Hoffman has maintained his buy rating on Nokia since February, adding a note of caution in June.


Walter Piecyk is less sanguine. "I think Nokia is down and all of wireless is down on concerns of growth," the analyst says. "Look at








and now Nokia. Why have they all missed their mobile phone revenues?" The companies, he notes, haven't offered explanations for the disappointing numbers, which feeds investor anxiety. PaineWebber has a buy rating on Nokia.

Around midday Thursday, Nokia was off 13, or 23%, at 42 13/16. Fellow handset-maker Ericsson was off 8%, while chipmaker Motorola was down 7% and all-around wireless powerhouse


(QCOM) - Get Qualcomm Inc Report

was down 3.8%.

Still, not everyone's biting his nails. Says Todd Koffman of

Raymond James

, "I don't think there's a secular slowdown in the handset market." While Nokia may be suffering during its new product transition, "This

setback is only a temporary phenomenon." Raymond James has a strong buy on Nokia and a neutral on Motorola and hasn't underwritten for either.

True, all's not lost for wireless investors. Nokia, for instance, remains well above year-ago levels even after Thursday's setback. But the recent run of warnings suggests investors may need to temper their enthusiasm.