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Nokia shares tumble 20 per cent on profit warning

Brings down telecoms sector with it

Nokia's shares have dropped over 20 per cent today following an unexpected profit warning from the world's largest mobile phone manufacturer.

The company said sales growth for Q2 was going to be "somewhat below" 10 per cent. It had originally predicted 20 per cent growth. Its chief exec Jorma Ollila said: "We believe this slowdown is a result of a general market deterioration - driven by economic uncertainty, the ongoing technology transition and less aggressive marketing by the operators." Earnings per share will drop from 0.20 euros to 0.15 to 0.17.

Nokia also warned it was looking at revising its estimates for the second half of the year. It will announce any changes with its Q2 results on 19 July.

Analysts have greeted the news as an indication that the US economic slowdown is starting to have an effect on the rest of the world.

The effect of the Nokia announcement also brought down the entire telecoms sector - with the ironic exception of BT. Ericsson saw its shares fall 9 per cent, Motorola slipped 6.5 per cent, Vodafone is down 4.3 per cent and still going, France Telecom down 3.1 per cent, Orange down 3.6 per cent. It goes on.

However, BT's announcement that it was going to go to the 3G toilet with Deutsche Telekom as a companion kept the troubled telco up - in fact share price actually went up for the first time in living memory.

Funny though that yesterday's news that mobile phone manufacturers had been secretly patenting cancer shields for their phones had no effect on the share price. Not that mobile phones actually cause cancer of course, it's just that people (oh, and a load of independent scientists) seem to think they do.

Mobile manufacturers are therefore looking after their customers by researching and patenting these things that are completely unnecessary. What does the industry's attitude remind us of? Oh yeah, the tobacco companies thirty years ago. ®

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