Nokia said on Tuesday it would reach its fourth-quarter earnings targets but saw its share price fall after the world's largest mobile phone maker sounded a cautious note on industry handset sales.

Nokia, briefing analysts and fund managers in New York, forecast group sales growth of about 15 percent next year and continued good profitability as a new range of Internet-enabled mobile phones enters the market.

Nokia, whose share price has nearly doubled from lows hit before September 11, traded 5.2 percent lower at 26.75 euros by 9:45 a.m. EST -- underperforming the Dow Jones Technology Index.

Investors reacted negatively to news that Nokia now expected only 380 million handsets to be sold globally this year instead of 390 million units forecast last month, analysts said.

"Their estimate for cellphone (sales) volumes was maybe a slight disappointment, which explains why the stock is falling," said senior analyst Mika Paloranta at Nordea Securities.

"But all in all the statement was quite neutral...I would say there was nothing else clearly negative in it," he said.

Rival Siemens AG said it was sticking to its forecast for industry sales of around 400 million units in 2001.

The mobile phone industry will see a reduction in handset sales this year, ending several years of runaway growth as markets, particularly in Europe, approach saturation point. Consumers are also not buying as many new phones because of delays in the introduction of new mobile Internet services.

Nokia also said it expected to see 420-440 million phones sold in the industry globally next year, slightly more conservative than a 420-460 million forecast by U.S. rival Motorola Inc, the world's second largest handset maker.

Analysts had been forecasting handset sales of 440-450 million units next year.

"It's very easy to ridicule how wrong we all were," Nokia Chief Executive Jorma Ollila said of the telecoms industry downturn of the past 12 months. "This is an economic environment that is difficult for all of us," he told analysts at the annual capital markets day.

Right on Target for Q4 Earnings

"Nokia remains comfortable with the overall fourth-quarter 2001 guidance given in conjunction with its third-quarter release on October 19," Nokia said in a statement on Tuesday.

Last month Nokia, which makes one-third of all handsets sold, said it expected fourth-quarter pro forma earnings per share to fall to 0.18-0.20 euros ($0.16-0.18), down from 0.25 cents in last-year's fourth quarter as it battles weak markets.

Nokia said it expected to see 25-35 percent group sales growth during the fourth quarter of 2002 at the latest.

It has gradually been softening this target as it grapples, like rivals Ericsson and Motorola, with weaker economies, operators putting orders on ice and consumer caution.

Nokia also said it expected pro forma operating margins for mobile phones -- the highest in the industry -- to remain at around the high teens throughout next year.

Nokia said it expected flat to slightly positive mobile networks market growth for 2002.

Last week Ericsson Chief Executive Kurt Hellstrom told Reuters he was cautiously optimistic about a rebound in the industry next year despite several wireless operators cutting back their investment plans.

Hellstrom also said the company was sticking to its flat to 10 percent lower networks sales forecast.

3G On Track

Nokia, like rival Ericsson, said the launch of high-speed third-generation (3G) networks was still on track. 3G is expected to fuel growth in coming years as consumers surf the Internet and watch video clips on their handsets.

Nokia said it would start shipping dual mode 3G phones in the second half of next year. Dual mode phones are expected to work on second-generation GSM networks used in Europe and some parts of North America and Asia as well as on 3G networks.

Analysts said they were disappointed that Nokia said it only expected 3G phones to account for about 10 percent of mobile phone unit sales in 2003.

Nokia said it expected annual double-digit industry market volume growth in handset units to continue from 2002 onwards.

Nokia, which has seen its global market share of mobile phones fall by two percent in the last six months, reiterated its long-term target of achieving a 40-percent market share.