Nokia shares nosedive after new profits warning

Nokia shares crashed 15 per cent as the Finnish mobile phone company admitted its profits will be hit by competition from Asian rivals such as China's ZTE.

Chief executive Stephen Elop warned that Nokia was feeling the most pressure in fast-growing regions such as India, the Middle East and Africa and China.

The fallen mobile phone giant said operating margins in the first quarter were "approximately negative 3 per cent", far worse than previous guidance of "around break-even", and it expects a similar slide in the next quarter.

It is yet another blow to Nokia which has already been struggling in the premium smartphone market where Apple's iPhone and Google's Android operating system are now dominant. Mr Elop, who memorably described Nokia as a "burning platform" a year ago soon after he took the job, admitted the performance was "disappointing" and claimed the business "continues to be in the midst of transition".

The shares have halved in a year and are down almost 90 per cent since 2007. Analysts are used to bad news from Nokia but the profit downgrade still came as a shock.

"It's a disaster," said Thomas Langer at WestLB bank in Germany, who warned sales of the new Windows-based Lumia phones were failing to offset a fall in the older Symbian model.

"Nokia continues to be a rollercoaster ride for investor sentiment as product cycles bedazzle but ultimately disappoint," said Lee Simpson, analyst at Jefferies in London. "For some hard-heads, the long-term trend to brand irrelevance is embarrassingly plain in some countries. Just what is Nokia if not an ailing low-margin box maker?"

Mr Elop has been battling to win over investors and consumers with the Lumia smartphones which have been developed with Microsoft.

In a further embarrassment, Nokia admitted it has found a software bug in its new flagship Lumia 900 model, which means the phone can sometimes lose its data connection.