Nokia shares falls on rating cut

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

We believe the main issue behind Nokia’s profit warning has been increased pricing pressure in the high end due to lack of competitive product,said analysts at UBS,while cutting their recommendation on the stock to ‘neutral’.

We believe investors will be unwilling to put faith in the execution on new devices,they said. Nokia is struggling to compete against Apple and Blackberry-maker Research in Motion as its offering is ageing and new flagship models are expected to reach the market only in time for holiday sales-fuelled fourth quarter.

The Finnish handset maker has splashed out more than $10 billion to build up its own services and software expertise to challenge Apple and Google,but has failed so far.

Nokia has shown no sign to date that its software capabilities can catch up with fast-moving rivals,Goldman Sachs analysts said in a note.

Goldman Sachs stuck to its ‘neutral’ rating on the stock,but cut its target price to 7.7 euros from 10.5 euros.

Charter Equity cut the stance on the stock to ‘market underperform’ from ‘buy’.

Absent a major change in strategy we see little hope for upside,analyst Ed Snyder said in a note.