The spread of economic gloom and fierce price competition between mobile phone companies has finally hit the world’s largest handset maker today. Nokia downgraded its third-quarter market-share outlook today and immediately Nokia shares traded down 11% at 13.98 EUR, almost a three-year low. With rival Sony Ericsson barely breaking even in the second quarter after average selling prices fell sharply leading to a two year profit warning, we hope that the analysts re-think Nokia’s position.
Certain price action by those who don’t have certain core advantages might not be as long lasting as they might think,” said Nokia’s Chief Financial Officer Rick Simonson in a conference call Friday, referring to cost cutting by rivals.
Despite the drop it seems that Nokia is still adamant in their future success, rightly so, and we need not look further than its full-year market share prediction. Glitnir analyst, Michael Schroeder has a buy rating on Nokia Shares and a 23 EUR target price which would mark a solid year. It seems that Samsung and Sony Ericsson’s price cuts in Asia and Samsung’s attack at the European market are generating the majority of the worries, but this still does not seem to worry the execs at Nokia.
Nokia said that it expects product launches and the start of new product shipments to be on track during the rest of the third quarter rand fourth quarter. If you need additional assurance, realize that the highly anticipated Nokia N96 has just launched and the E71 is aggressively attacking business markets.
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