Mobile phone giant Nokia reported a further sales slump today despite a range of new handsets aimed at clawing back market share.
Shares in the Finnish group dived 16% as it warned profitability would stay under pressure for the rest of its financial year.
Nokia, which has already warned that turnover would be “flat or slightly below” the €7bn posted last year, said sales fell to €6.64bn in the second quarter.
The news came as rival Sony Ericsson reported a 34% increase in sales for the quarter amid strong demand for its camera phones.
Nokia is the world’s leading mobile phone manufacturer and supplies third-generation network technology to a range of customers worldwide.
But its dominant position has come under threat in recent months from rivals such as Samsung and Siemens, as well as from the strength of the euro against the US dollar.
The group said price cuts aimed at regaining market share and its range of phones hit its performance in the second quarter.
Nokia started selling eight new handsets during the period – including new camera phones and clamshell designs.
But it warned that income from these ranges would be offset by price cuts on existing products, adding: “As a result, we expect our profitability to continue to come under pressure during the second half of the year.”
Nokia said these price reductions were successful in stabilising its market share, which dropped by 1% to 32%.
Other data from market research group Gartner last month claimed Nokia’s market share slumped to 28.9% in the first quarter.
Meanwhile, Sony Ericsson reported sales of €1.5bn during its fourth consecutive quarter of profits growth. Pre-tax profits for the quarter were €113m, compared with a deficit of €102m for the same period last year.
It said the figures reflected strong demand for multi-media phones.
“We are confident that, as we continue to enhance our portfolio with exciting and innovative products, the Sony Ericsson brand will become ever stronger,” the group said.