Dec. 4 (Bloomberg) -- Nokia Oyj, the world's biggest maker of mobile phones, raised its forecast for profit margins while predicting a further decline in selling prices next year.

Nokia, up 78 percent this year before today, fell 4.4 percent in Helsinki. Operating profit will be 16 percent to 17 percent of sales in one to two years, the Espoo, Finland-based company said in a statement, up from 15 percent predicted a year ago. Nokia also sees ``some decline'' in average industry prices.

``It's hard to see where you can generate additional revenue,'' said Nicolas von Stackelberg, an analyst at Sal. Oppenheim Jr. & Cie. ``Expectations had been running high before this event and there's nothing earth-shattering.''

Chief Executive Officer Olli-Pekka Kallasvuo increased profit and market share with phones costing less than $50 and models with satellite navigation, music and e-mail. Nokia is bundling Internet services including music, maps and games to capture revenue beyond handset and network-equipment sales.

Nokia fell 1.21 euros to 26.37 euros. Before today, the stock was the third-best performer this year on the 50-member Dow Jones Euro Stoxx 50 Index, which had gained 6.1 percent.

The announcements were made at a meeting with analysts, investors and journalists in Amsterdam today.

Industry Growth

The Finnish company also forecast the industry will grow about 10 percent in 2008 from the 1.1 billion units shipped this year. Nokia said industry volume growth in 2008 will top 15 percent in the Asia-Pacific region, China, the Middle East and Africa, and will be less than 10 percent in North America, Europe and Latin America.

``I was hoping for more clarity on what the reporting structure is going to be and how they break out numbers'' for the three device groups, said Sal. Oppenheim's von Stackelberg, who is based in Frankfurt.

Nokia's market share in the quarter stood at 39 percent, according to researcher Strategy Analytics. That's more than the next three rivals, Samsung Electronics Co., Motorola Inc. and Sony Ericsson Mobile Communications Ltd., combined.

``We're not limiting ourselves to'' a 40 percent market share, Kallasvuo said in a presentation in Amsterdam. ``What we'll see in the future is share gain with good profitability.''

There will be an estimated 4 billion handset users by 2009, Nokia said today, a year earlier than it had estimated before.

Margin Focus

Nokia's device units -- mobile phones, multimedia and enterprise solutions -- have increased their combined operating margin for four straight quarters and the margin was about 22 percent in the third quarter.

The operating margin at Nokia's devices and services unit is forecast at about 20 percent in the next one to two years, the company said today. A comparable figure for the unit, which is part of a new organizational structure starting Jan. 1, is about 19 percent in first nine months of this year, Nokia said.

``We feel pretty good about our portfolio,'' Nokia Chief Financial Officer Rick Simonson said in an interview. ``I like how it looks in both ends of the market.''

Nokia's operating profit margin gained in the third quarter even as average selling prices dropped because of the rising proportion of cheaper devices sold in emerging markets.

``There's some disappointment about that lack of real news,'' said Greger Johansson, an analyst at Redeye AB, who recommends holding the stock. ``The stock has advanced extremely well and expectations have risen.''

Nokia's third-quarter profit rose 85 percent to 1.56 billion euros ($2.29 billion) as handset shipments increased 26 percent.

Market Share Push

Schaumburg, Illinois-based Motorola, which slipped behind Samsung as the world's third-biggest handset maker, has continued to suffer as its new Razr model has failed to halt a loss of market share. Suwon, South Korea-based Samsung said last week it expects shipments to rise 25 percent in 2008, outpacing the industry growth, on demand for high-end models.

``There's always a lot of competition in the mid- and high- end'' of the market, Simonson said. ``Each time they try to challenge us they suffer a bit of pain'' in the low-end segment, he said, referring to competitors.

To stay ahead of rivals, Nokia is bolstering Internet services with music, maps and games through its Ovi site. Nokia unveiled the ``Comes With Music'' program today, allowing people to buy a Nokia phone with a year of unlimited access to millions of tracks. The program will start together with Vivendi SA's Universal Music, and Nokia is in talks with other major labels.

Adding Navigation

Nokia agreed in October to buy digital-maps maker Navteq Corp. for $8.1 billion, taking control of maps for its navigation-enabled phones.

``The dynamics of the industry is changing fast,'' Kallasvuo said. Still, ``devices are our core business and will continue to be so in the future.''

Earnings growth this year has been held back by Nokia Siemens Networks, a venture with Siemens AG that started operations at the beginning of April. The venture, which has posted two straight quarterly losses, would have been profitable in the third quarter without some one-time costs.

``Networks will remain in the doldrums,'' von Stackelberg at Sal. Oppenheim said.

Today, Nokia said it is targeting an operating margin of 10 percent at Nokia Siemens by the end of 2009.

Nokia ``expects very slight growth for the mobile and fixed infrastructure and related services market in euro terms in 2008,'' it said in a statement, adding that it aims to grow faster than the market next year.

The Nokia Siemens venture plans to book more than 2 billion euros in restructuring costs, most of it this year. Nokia Siemens aims to achieve 2 billion euros in annual savings, the majority by the end of 2008, through measures that include 9,000 job cuts.

Stockholm-based Ericsson AB, the world's biggest maker of wireless networks, said last month markets in Europe and North America are ``tightening'' and sales will be at the low end of a forecast range this quarter, the second outlook cut in a month.

To contact the reporter on this story: Maria Fredriksson in Stockholm at mfredriksson@bloomberg.net; Juho Erkheikki in Amsterdam at jerkheikki@bloomberg.net.

Last Updated: December 4, 2007 11:50 EST