Aude Lagorce reports that shares of Nokia fell up to 10% on Thursday last week after the world’s largest mobile phone make reported a smaller-than-expected 25 percent increase in its first quarter sales and estimated the mobile-phone market to shrink in euro terms in 2008.

“Nokia’s net profit in the three months ended March 31 improved to 1.22 billion euros, or 0.32 euro a share, from 979 million euros, or 0.25 euro a share, earned in the year-ago first quarter. The profit missed consensus forecasts calling for earnings of 1.38 billion euros, according to a survey of 29 analysts conducted by FactSet,” Lagorce reported.

“Excluding one-time costs for pensions and the closure of a plant, the latest quarter’s earnings came in at 0.38 euro a share. Sales rose 28% to 12.7 billion euros, in line with expectations. Nokia’s shares were last down 10% in early afternoon trading in Helsinki,” he added.

Citigroup analysts expressed concern about the lack of major products in the second quarter, saying it won’t launch a touch-screen competitor to Apple Inc. and its high-end iPhone until the second half of the year.

Nokia chief executive Olli-Pekka Kallasvuo brushed off suggestions that the company needs to work on a better fight back to iPhone, calling the Apple device as a “niche product”.