May 14 (Bloomberg) -- Nokia Oyj, the world's largest maker of mobile phones, said its market share will rise in the second quarter, sending the stock to the highest in more than four years.

The company's global market share will rise from 36 percent in the first quarter as some competitors have cleared excess inventory, Espoo, Finland-based Nokia said today in a stock exchange statement. The company had previously predicted its market share would be unchanged as rivals had to sell off handsets, making it harder for Nokia to win market share.

The market share gap between Nokia and closest rival Motorola Inc. widened to its largest in more than three years in the first quarter as the Schaumburg, Illinois-based company failed to unveil devices to replace its bestselling Razr model, Strategy Analytics Ltd. said last month. Motorola's market share plunged to 18 percent in the first quarter from 20.4 percent a year earlier, according to Boston-based Strategy Analytics.

``The focus of investors is squarely on Nokia's market share right now, and the raised forecast today confirms the company's strength while its competitors falter,'' said Tommi Saukkoriipi, a fund manager at Nordea Bank AB in Stockholm, which oversees the equivalent of about $172 billion including Nokia stock. ``Nokia's economies of scale are kicking in, demonstrating that it can increase market share while maintaining solid profitability.''

Shares Gain

Shares of Nokia rose 72 cents, or 3.9 percent, to 19.14 euros in Helsinki, the highest level since December 2002 and bringing company's market value to 75.2 billion euros ($102 billion). Shares of Motorola fell 16 cents to $18.16 at 4:01 p.m. New York. Before today, Nokia's stock was up 19 percent this year, compared with an 11 percent drop for Motorola's shares.

Nokia's stock has gained as the company has twice reported that gross margins, or sales minus the cost of goods sold, widened from the previous quarter, even when average selling prices stagnated or declined.

``A lot has been going right'' for Nokia, said Colin McLean, managing director at SVM Asset Management in Edinburgh, which oversees about $1.8 billion.

Nokia's first-quarter market share rose to 36.2 percent from 33.2 percent a year earlier, researcher Strategy analytics said.

Olli-Pekka Kallasvuo, Nokia's chief executive officer, said on April 19 the company wasn't ``overly'' aggressive on pricing and taking market share because it wanted to maximize profit.

Nokia said it continues to target an increase in its market share for the full year.

Nokia Vs Motorola

The Finnish company's first-quarter profit fell 6.6 percent to 979 million euros on sales of lower-priced handsets in China and India. The average selling price of a Nokia phone was unchanged from the previous three months at 89 euros, and fell from 103 euros a year earlier. Motorola posted a first-quarter loss and its first drop in sales in almost four years after cutting prices to try to compete with Nokia.

``Nokia believes that its device shipments in the second quarter 2007 will be positively impacted, as excess device inventory in the market has sufficiently cleared,'' the company said today in the statement. ``This excess inventory also temporarily impacted Nokia's visibility into short term market developments.''

Nokia expects the global handset market to rise as much as 10 percent this year from 978 million units sold in 2006, when growth topped 20 percent, it said last month. Industry shipments should rise ``slightly'' this quarter from the previous three months, when they fell 13 percent.

To contact the reporter on this story: Juho Erkheikki in Helsinki at jerkheikki@bloomberg.net.

Last Updated: May 14, 2007 16:11 EDT