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The world’s top
cellphone maker Nokia cut its profit outlook and delayed the launch of
phones it needs to compete with the iPhone and Blackberry in the
fast-growing high end of the market.

Nokia still lacks a
top-range model to challenge Apple’s iPhone three years after its
launch. It’s last high-end hit phone was the N95, which was unveiled in
2006.

Nokia reported on
Thursday a rise in January-March earnings and sales, roughly in line
with expectations, but cut the outlook for its 2010 operating profit
margin at its key phone unit to 11-13 percent from 12-14 percent.

The average forecast of 33 analysts in a Reuters poll was 13.7 percent.

Shares in Nokia
were 14.5 percent lower at 9.64 euros by 1142 GMT, dragging the STOXX
Europe 600 Technology Index .SX8P four percent lower.

The smartphone
market continued to expand through the economic downturn, helped by
cheaper models, and research firm Gartner has forecast it will grow a
whopping 46 percent this year.

Nokia delayed the
renewal of its Symbian software — seen as crucial to improve its
position in the high-end of the market — to the third quarter from
second quarter.

“This is pretty
significant as Nokia and Symbian have lost a lot of market share in the
last few years,” said analyst Neil Mawston from Strategy Analytics.

“Psychologically it
is a blow as well as iPhone, Blackberry ad Android are surging ahead
with software updates. Symbian cannot afford any delays,” said Mawston.

Smartphone prices drop 17 pct in one quarter

Nokia slashed
prices of its cell phones across its portfolio this week, with the
deepest cuts of around 10 percent seen for some smartphone models, data
seen by Reuters showed on Thursday.

Nokia is struggling
to battle with new rivals Apple and Blackberry maker Research in Motion
(RIMM.O) at the high end of the cellphone market, and sees a cheaper
price as its strongest weapon to hold on to market share, analysts said.

Nokia is benefiting
from growth among cheap smartphones, which dragged the average sales
price of a Nokia smartphone 17 percent from the previous quarter to
just 155 euros ($208). This compares to more than $600 for iPhone.

Apple’s quarterly
results blew past Wall Street expectations on the back of record iPhone
sales earlier this week, and the company gave a strong revenue
forecast, sending its shares to an all-time high.

For Nokia,
underlying first-quarter earnings per share rose 40 percent from a year
ago to 0.14 euros ($0.19), marking the first annual rise since the
second quarter of 2008 but missing the average forecast of 0.15 in a
Reuters poll of 43 analysts.

Earnings were
boosted by massive cost cuts as Nokia slashed thousands of jobs last
year, aiming to reduce costs at its key handset unit alone by more than
700 million euros to counter recession-hit demand.

January-March sales
at the market leader, which makes one in three phones sold globally,
grew 3 percent from a year ago, also rising for the first time since
the second quarter of 2008.

Nokia shares had
gained 26 percent in 2010 prior to the result, boosted by strong
fourth-quarter results and hopes that its smartphones business was
winning back lost market share. The share remains 8 percent higher for
the year.

($1=.7439 Euro)