HELSINKI (AFP) – The world's top mobile phone maker Nokia saw its share price drop again Wednesday, a day after closing 17.5 percent lower following a dramatic downgrade of its second quarter outlook.
The mobile phone giant's share price dropped more than 10 percent around midday to 4.27 euros a share, but regained most of that loss by closing, when its stock was down just 0.76 percent at 4.70 euros a share.
It appeared the haemorrhaging was over as some investors "are looking for a near-term bottom in the stock and buying upside calls," Pipeline Trading Systems explained to the Dow Jones Newswires.
The flattening out of Nokia's share price came amid a rumour that Microsoft had agreed to purchase the Finnish company's mobile business for $19 billion (13 billion euros).
The unconfirmed report on the website Boy Genius, which cited industry insider Eldar Murtazin as the source, pushed Microsoft's shares lower but may have helped the stock in Nokia, which denied the claim.
Nokia's two days of losses nonetheless left its share price at the lowest level since early 1998, right before it became the industry leader.
Analysts said the drop was due to a sense of betrayal among investors over the company's announcement Tuesday that its second quarter sales would be far worse than previously expected and that it could no longer give a full-year forecast.
"It was quite a shock. Nokia just had an annual general meeting and they didn't give any hint of this, in fact, they gave the impression that everything was just fine," the chairman of Finland's Shareholders' Association, Timo Rothovius, told AFP.
Nokia chief executive Stephen Elop, who joined the company from Microsoft last year, said Tuesday the Finnish company's sharp outlook downgrade was part of a rocky transition period as it phases out its Symbian smartphone platform in favour of a tie-in with Microsoft Phone.
The mobile phone maker said it hopes to regain lost ground when it starts shipping its first Microsoft handsets at the end of this year.
"The problem is that they are losing market share at such a pace that there's a risk that consumers won't be interested in buying Nokia phones anymore," said Rothovius.
While it remains the world leader, Nokia has in recent years seen its global market share dwindle amid harsher competition in the high-end smartphone sector.
The company said earlier this year its market share in the first quarter had fallen to 29 percent from 33 percent a year earlier, and compared with 40 percent in the first half of 2008.
Investors were not the only ones who were disappointed.
Ratings agency Moody's said Wednesday it had placed Nokia's long term debt rating under review for a possible downgrade, saying the Finnish company's revised outlook "indicates a faster than anticipated erosion in market share."
That in turn would increase pricing pressure, Moody's said, adding that "as a result, Nokia may enter into a phase of cash consumption and will start the Windows Phone period ... from a substantially weaker market position."
A number of investment banks, including Goldman Sachs, Bernstein Research, RBS and Credit Suisse, also downgraded their Nokia ratings Wednesday.
Pohjola Bank analyst Hannu Rauhala told AFP it was impossible to predict how the Microsoft tie-in would affect Nokia's performance after this turbulent year.
"There is nothing more than a preliminary schedule for the new products. We don't know what kind of cost structure there is, what kind of ecosystem it will be, or how consumers will accept them," he said, adding that there was "a great temptation to be pessimistic" about the fourth quarter.
He also pointed to the unpredictability of a global mobile market in upheaval, with markets, devices, companies and usage changing so fast that it is creating a great deal of opportunity "but lots of uncertainty too."
Rothovius meanwhile said he believed the falling share price could be a short-term adjustment.
Finland's financial media meanwhile seemed more pessimistic, with respected business webzine Taloussanomat pointing out that Danske Bank has warned Nokia's share price could drop as low as 2.20 euros.
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