Nokia warned that profitability at its key phones unit would be weaker than expected this quarter and in 2010 as it struggles to compete against high-end rivals like Apple.

"Investors are worried about Nokia's long-term market position. Nokia loses market shares at the high-end, the mix worsens and margins go down. At the high-end, Nokia loses mainly against Apple," Inge Heydorn, analyst at Sentat Asset Management said.

Nokia said during the second quarter 2010, multiple factors hurt its business to a greater extent than it had expected.

"These factors include: the competitive environment, particularly at the high-end of the market, and shifts in product mix towards somewhat lower gross margin products," the company said.

"In addition, the recent depreciation of the euro affects Nokia's cost of goods sold, operating expenses and global pricing tactics."