Shares in the world's top mobile phone maker Nokia dived 11 percent Wednesday after it slashed its second-quarter and full-year forecasts for its key devices and services unit.

• George Soros betting on Nokia
• Nokia shares plunge on profit warning rumours

"During the second quarter 2010, multiple factors are negatively impacting Nokia's business to a greater extent than previously expected," Nokia said in a statement, blaming shifts in product mix towards "somewhat lower gross margin" phones.

The recent weaker euro had also impacted sales prices, operating expenses and global pricing tactics, Nokia said.

"Nothing has changed. The challenges remain but it was still a surprise for the company that the second and third quarter will be more challenging than they had estimated," Nordea analyst Sami Sarkamies told AFP.

"A new factor is the foreign exchange rate, which did not impact the previous quarter," he said.

Nokia remains the market leader in mobile phones but it has struggled to compete in the expensive smartphone segment, with rivals like Research in Motion's BlackBerry and Apple's popular iPhone offering tough competition.

Nokia's Symbian operating system is seen as clumsier than those of its rivals and updated, faster, more user-friendly replacement models have been delayed and are expected to start shipping only later in the year.

Smartphones are advanced handsets that allow users to surf the Internet, record videos and carry out other multimedia functions as well as talk and send messages.

"We expect the situation to begin normalising in the fourth quarter" as new products come to market, Nokia chief financial officer Timo Ihamuotila was quoted by Dow Jones Newswires as saying.

"It's fair to say the third quarter is expected to remain challenging," he added.

Nokia said it expected sales in the devices and services unit to be "at the lower end of, or slightly below" the 6.7-billion-euro (8.2-billion-dollar) to 7.2-billion-euro range it had previously given for the April-June period.

It said the unit's operating margin would also be at the lower end or slightly below the range of 9 to 12 percent previously given for the second quarter, and in the full year it would be at the lower end or below its previously given target of 11 to 13 percent.

For the full year, Nokia said it expected its mobile device market share by value to fall slightly from 2009. It had previously forecast a slight increase.

The Finnish company said it continued to expect industry mobile device volumes to rise by around 10 percent this year and still aimed to maintain its market share by volume.

Shares in Nokia were slammed on the news, falling as much as 11 percent. By 5:00 pm (1400 GMT), the stock was 8.14 percent lower at 7.28 euros on a Helsinki bourse down 1.3 percent.

The stock had already been shaken by market whispers of a profit warning that emerged last week. In June 2000, the shares hit an all-time-high of 65 euros in the midst of the dot.com bubble.

The Hungarian-American speculator George Soros recently picked up $16.9 million worth of Nokia shares to open his position in the company.

Nokia is due to release its second quarter results on July 22.