Nokia Lowers Earnings ForecastNokia Lowers Earnings Forecast

Nokia has lowered its financial outlook, an indication that the world's largest mobile phone maker is feeling the heat of competition from Apple's iPhone, Research In Motion's BlackBerry, and makers of Android-based devices in the smartphone market.

Nokia said Wednesday it expects net sales to be at the lower end, or slightly below its previously expected range of 6.7 billion euros ($8.2 billion) to 7.2 billion euros ($8.9 billion) for the second quarter. The reason behind the revised forecast is lower-than-expected sales and average selling prices.

In addition, Nokia revised the expected operating margin of its devices and services unit to the lower end, or slightly below, the previous forecast of from 9% to 12%.

Nokia is scheduled to release earnings July 22.

Nokia has struggled to capture some of the smartphone limelight directed at Apple, RIM, and manufacturers of phones based on Google's Android operating system.

In the first quarter, Nokia continued to lead the global smartphone market with a 39.3% share, but the momentum was clearly with Apple, according to IDC. While Nokia's share was unchanged from the same period a year ago, Apple's share rose more than 5 percentage points to 16.1%. Apple shipped 8.8 million iPhones in the quarter, a 131.6% increase from a year ago.

RIM, the world's second-largest smartphone maker, had a 19.4% share, a drop of 1.5 percentage points from a year ago. However, RIM shipped 10.6 million BlackBerrys, an increase of 45.2% from a year ago, IDC said.

Also shipping more smartphones is fourth-place HTC. The company's 73.3% year-over-year growth in shipments in the quarter was driven by its growing portfolio of smartphones powered by Google's Android OS, IDC said.

Overall, the growth rate of the global smartphone is more than double the mobile phone market as a whole, a clear indication of the market direction.

As the market grows, Nokia has not been standing still. In April, the company unveiled the N8, which it is positioning as a "portable entertainment center." The device, scheduled to ship in the third quarter, is the company's first phone to be powered by the latest edition of the Symbian smartphone OS, which gets most of its support from Nokia.

Nokia is also working with Intel in developing a new operating system, called MeeGo, for the emerging market for tablet-style computers, smartphones, and other mobile devices. However, the two vendors have yet to attract the level of attention from application developers equal to that of Apple and Google for the iPhone OS and Android, respectively.