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Amsterdam: Nokia said on Tuesday it expects to reach an operating profit margin of around 20 per cent over the next one to two years from its cellphone and services business.
Shares in Nokia fell more than four per cent on the news as many investors had expected a more upbeat profit forecast for the Finnish firm's key business, which has reached a margin of 19 per cent so far this year.
"Their new margin targets weren't as good as needed - they're already on those levels," said SEB analyst Leif Pettersson.
The world's top cellphone maker, which makes more phones than its three closest rivals combined, said it sees all vendors together selling around 10 per cent more phones in 2008 than this year.
Samsung
Samsung Electronics, the world's second-largest cellphone maker, last week forecast 12 per cent growth for the market. Most other forecasters have been more modest with their estimates.
Nokia said it aims to raise its market share to more than the 39 per cent it reached in the last quarter.
Nokia dominates the low end of the cellphone market where it benefits from economies of scale. Most other vendors are not able to offer attractive cellphones for prices below 30 euros ($44).
The Finnish firm raised its group level operating profit target to 16-17 per cent in one to two years from a previous target of 15 per cent. Analysts have forecast an average 15.2 per cent margin in 2008 and 15.7 per cent in 2009, according to estimates.
Nokia said it saw very slight growth in the infrastructure gear market next year, and shares in Swedish Ericsson fell close to two per cent in Stockholm.
Nokia shares have risen 78 per cent so far this year, compared with almost unchanged DJ Stoxx European technology index, lifted by forecast-beating results and a new growth strategy focusing on mobile internet services.
Nokia also announced that it had signed a deal with the world's biggest music group, Universal, owned by French media giant Vivendi, to offer all of Universal's music free for 12 months to buyers of new music phones starting from the second half of 2008.
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