UPDATE 5-Nokia profit in line, but market view pummels stock

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By Tarmo Virki

HELSINKI, April 17 (Reuters) - Nokia (NOK1V.HE: Quote, Profile, Research) said on Thursday it expected the cellphone market would fall in euro terms this year due to the weakening U.S. dollar, knocking more than 13 percent off its shares.

The world's largest handset maker reported underlying first-quarter profit rising as expected, but a bigger-than-expected fall in its average selling price for phones also weighed on the stock.

The Finnish company cut its forecast for the cellphone market value due to changes in the currency market, but repeated that a boom in emerging markets would lift shipment volumes by 10 percent from 2007.

The euro hit a new high just shy of 1.6 against the dollar <EUR=> on Thursday. The European common currency has strengthened about 10 percent against the dollar in 2008 and is up 18.2 percent over the last 12 months.

"This (currency) move has been dramatic. It is unprecedented," Nokia Chief Financial Officer Rick Simonson told Reuters.

"According to our estimates, the market is expected to clearly grow in value terms on a constant currency basis," Chief Executive Olli-Pekka Kallasvuo said on a conference call with analysts.

Nokia's average selling price for phones in the first quarter also disappointed the market, falling to 79 euros from 83 euros in the previous quarter, while analysts had on average expected 81 euros.