Nokia posts 66 percent drop in profit for Q2, share price falls immediately

This morning, mobile giant Nokia reported a 66 percent drop in profits for the second quarter, and candidly admitted that it doesn’t expect to gain market share, lowering its profitability targets going forward. Almost immediately, the company’s share price plunged 14 percent.

Sales grew even thinner throughout the second quarter, falling 25 percent overall to $14 billion. Its mobile devices division alone saw a 28 percent decline in sales, hitting $9.3 billion. Nokia says it shipped 103.2 million phones last quarter, down 15 percent since last year — though up 11 percent since the first quarter, which is notoriously slow for sales. Along similar lines, Nokia’s market share fell from last year’s 40 percent to 38 percent — up from 37 percent in Q1.

Unsurprisingly, Nokia attributed the disappointing figures to the limping global economy, citing “weaker consumer and corporate spending, constrained credit availability and currency-market volatility.” During the earnings report, the company predicted that the global market for mobile shipments will contract 10 percent this year.

But market watchers say competition from smartphone leaders like Apple and BlackBerry has also taken its toll. Nokia said it has 41 percent of the smartphone market today, unchanged from the second quarter of last year, suggesting no growth.

A while ago, the company had announced its goal to gain market share in the second half of the year — a goal it is now rescinding after evaluating the market. Not that anyone else in the sector is doing much better. Nokia’s rival, Sony Ericsson, also reported losses — it’s fourth quarter in a row — and said it is shipping almost half the number of mobile units it was last year.

Nokia executive Tero Ojanpera spoke at today’s MobileBeat conference on the company’s smartphone market share and its online application store — its answer to the iPhone App Store and Android’s marketplace. Coverage of his talk coming soon. (By the way, you can listen in to today’s MobileBeat2009 conference on Stitcher.)