Nokia, the world's biggest mobile phone maker, gave warning today that it would lose market share in the current quarter as it refused to join in a price war waged by its rivals.

The mobile phone giant also admitted it would delay the launch of a new handset, as it said its market share in the third quarter would fall below the 40 per cent it achieved in the previous three months.

Shares in Nokia dived 14 per cent, the most since April 2004, and settled later at €14.05, 11 per cent down.

However, while demand will be hurt by "weaker consumer confidence in multiple markets", Nokia stuck to a forecast of 10 per cent industry growth in 2008, reports Bloomberg.

The company did not identify the mid-range handset that it was delaying or which competitors had cut prices.

Motorola and Sony Ericsson, the third and fifth-largest handset makers, lost share to Nokia in the second quarter. Samsung Electronics ranked second in market share last quarter, while LG Electronics was fourth.

"There is an undercutter in the market and Nokia doesn't want to sacrifice its margins", Michael Schroder, an analyst at Glitnir Bank in Helsinki, said.

The global mobile-phone market probably will rise by 10 per cent or more this year from the 1.14 billion units sold last year, Nokia said today in a statement. Industry sales in the third quarter will also increase from the preceding three months, the company added.

In July, Nokia reported earnings and revenue that exceeded analysts' estimates and raised its forecast for industry sales on increased demand in Russia and India. Olli-Pekka Kallasvuo, the chief executive, said at the time that Nokia's market share had increased to 40 per cent during the quarter.

Sony Ericsson said in June that declining sales of higher-priced handsets and delays to new products almost wiped out second-quarter earnings. The company, which slipped to fifth ranking this year among handset makers, will cut about 2,000 jobs.

New products and handset shipments will be "on track" for the rest of the year, Richard Simonson, Nokia's chief financial officer, said. The company will report third-quarter earnings on October 16.

This year, Nokia bought Navteq for $8.1 billion (£4.6 billion) to add navigation maps for phones. The company also has teamed up with record labels to sell portable music in an effort to boost revenue and attract customers. Nokia also plans to introduce touch-screen models this year, and the first devices will aim at the "volume market", the company said in July.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange