Nokia warns on profits as competition gets tougher

Nokia warned yesterday second-quarter sales and profits at its key phones unit would be weaker than expected as it struggles to compete against Apple’s iPhone.

Nokia said profit margins at its key cellphone unit would be at the lower-end of its forecasts, or below, in the second quarter and in 2010, citing tougher competition, particularly at the high-end of the market as well as and shifts in product mix toward somewhat lower gross margin products.

The firm had previously predicted the unit’s operating margin would be 9-12 per cent in the second quarter and 11-13 per cent for the full-year.

The second profit warning in less than two months has further increasing pressure on Nokia’s chief executive Olli-Pekka Kallasvuo.