Investors dumped Nokia shares again on Wednesday, taking them to their lowest in more than 13 years after a profit warning a day earlier raised fears the handset maker may never regain its shrinking market share.

As analysts cut price targets, the stock fell as much as 10 percent, extending the previous day's 18-percent fall. By 1345 GMT it was trading down 5.4 percent at 4.49 euros in volume of around four times the 90-day average.

Nokia said on Tuesday mobile phone sales in the second quarter would be substantially below a previous forecast and abandoned its full-year outlook, blaming difficult conditions in China and Europe.

Part of the decline was expected as Nokia is moving to Microsoft Corp's Windows software from its own Symbian platform, a plan set three months ago by new Chief Executive Stephen Elop. But customers are fleeing faster than expected.

Analysts said they were not sure if the company can catch up even after it starts selling Windows-based phones in the fourth quarter.

We would continue to avoid the stock as Symbian smartphone sales are falling off faster than expected, and we are skeptical that new Windows Phone models will be able to replace lost profits, said Gleacher & Co analyst Stephen Patel.

After Tuesday's drop, Nokia shares were trading at 10.4 times 12-month estimated forward earnings, compared with Apple's 12.7 times and Microsoft's 9.1 times.

The company faces tough competition from Apple Inc and Google Inc as well as lower-end handset makers.

In a sign of worse to come, mobile operators in Europe told Reuters that Nokia's new Symbian phones -- a stopgap until the end of the year -- were of little interest.

European operators are seen crucial to the success of devices in the region because of the subsidies they provide.

Last quarter, Nokia made 29 percent of its devices and services sales in Europe, a year-on-year decline of 5 percent. Greater China sales grew 30 percent to 27 percent of the total, although that market is also crowded with tough rivals.


We are concerned that the erosion that the company has suffered in Q2 is just the beginning and that there could be worse to follow, Nomura's Global Technology Specialist Richard Windsor wrote in a note.

Nomura cut its price target on Nokia shares to 4.00 euros from 4.75 euros and kept its reduce recommendation.

J.P. Morgan cut its price target to 4.25 euros from 5 euros, while Credit Suisse cut its to 4 euros from 5.5 euros.

Nokia has begun shipping its new Symbian phones, the business-focused E6 and multimedia X7, but most European operators contacted by Reuters had no plans to offer them.

Nokia is some way behind, I'm afraid, in terms of the smartphone user experience, said a spokesman for one British operator who asked not to be named.

Gartner analyst Carolina Milanesi said Nokia's problem, particularly in operator-controlled Europe, was that it needs to reduce prices considerably to stay competitive.

Operators are not going to be prepared to subsidize handsets where they don't see demand, said Milanesi.

A spokeswoman for Telekom Austria, which is offering the E7 in all the countries in which it operates but not the X7, said: In general, Nokia handsets in the ultra-low cost area are still interesting devices for our customers, but in the smartphone space we can ignore them for the moment.

In Britain, Vodafone will offer the E6, and Hutchison Whampoa's 3, the country's smallest operator, will offer the X7. T-Mobile and Orange have no plans to offer either.

A spokeswoman for Deutsche Telekom in Germany said its T-Mobile unit would be launching the X7 in four weeks' time, but not the E6.

Like T-Mobile in the UK, she welcomed the advent of Android-based smartphones from Chinese vendors such as ZTE, which makes phones for operators to put their own brand on, as well as ZTE-branded phones.

The challenge we see with Nokia is that the Symbian phones are quite expensive, she said. ZTE has an advantage as they offer smartphones that are less pricey.

Pohjola Markets analyst Hannu Rauhala cut his recommendation on Nokia shares to accumulate from buy but was still more optimistic than others, saying it was unclear whether Asian rivals could continue taking market share through price cuts.

We have seen these kinds of situations in history before, he said. I wouldn't make far-reaching conclusions yet if we are talking about device manufacturing.

(Additional reporting by Nicola Leske in Frankfurt and Dominic Lau in London; Editing by Louise Heavens and Will Waterman)