January-March underlying earnings at Nokia, the world's biggest maker of mobile phones, rose in line with expectations Thursday, but its view of the market in 2008 dented its share price.
Nokia said it now expected the cellphone market to fall in euro terms in 2008, while the boom in emerging markets would lift shipment volumes by 10 percent from 2007.
"The change from our previous estimate of value growth for this market primarily reflects the negative impact of the recently weakened U.S. dollar, the general economic slowdown in the U.S., and possibly going forward some economic slowdown in Europe," Nokia said in a statement.
But demand continues to be strong in certain categories, Nokia CEO, Olli-Pekka Kallasvuo told CNBC Europe.
"We are seeing very, very good demand in the emerging markets," Kallasvuo said. "The situation in all markets, with the possible exception of the US really continues to be pretty solid."
The company said on Thursday its earnings per share for the three months, before one-off items, rose, as expected, to 0.38 euros from 0.26 euros in the same period of 2007, though larger-than-expected one-off costs pushed reported EPS to 0.32 euros, missing analysts' forecasts.
Shares in Nokia closed 13.6 percent lower, when the DJ Stoxx European technology sector index was down 7.3 percent.
Nokia sold 115.5 million phones in the quarter, more than its three closest rivals combined, and estimated its market share at 39 percent, below the average of analysts' forecasts of 39.7 percent.
"It's a very difficult competitive environment, that goes without saying. If you look at our performance and the way Nokia-Siemans networks have been able to make progress during it's first year of operations, I'm very happy with that," Kallasvuo told CNBC Europe.
The Finnish company has a strong lead in emerging markets including China and India, which it has been fiercely defending.
The company will continue to invest in Europe, Latin America, Africa and the U.S. in the coming quarters, Kallasvuo said.
The average selling price of phones in the first quarter was 79 euros, down from 83 euros in the previous quarter and behind the average of analysts' forecasts of 81 euros.
-- Reuters contributed to this report